This  book  is  DUE  on  the  last  date  stamped  below 

MyiR  2  7  1925 


3  1   1930 


JAN  9     194S 
RECO  UMiRQ 


r 


Form  L-9-15wi-8,'24 


Property 


1859 —  J  920 


^Qu  'est~ce  que  la  propriete? 
La  propriete,  c'est  le  vol." 

—  PROUDHON 


PROPERTY 


By 

Arthur  Jerome  Eddy 

Author  of  "The  Law  of  Combinations,"  "The 
New  Competition,"  Etc.,  Etc. 


CHICAGO 

A.  C.  McCLURG  &  CO. 

1921 


58584 


Copyright 

A.  C.  McCLURG  &  CO. 

1921 


Published  July,  1921 


M.    A.    DONOHUE    a    CO.,   PRINTERS    AND    BINDERS,   CHICAGO 


J 


Hf3 


CONTENTS 

PAGE 


hr 
\ 

^             I  Introduction 1 

^v           II  The  Average  Fortune 28 

vv"^        III  An  Economic  Fiction 35 

IV  Only  for  Life 64 

V  The  Russell  Sage  Fortune 83 

^  VI  The  Marshall  Field  Fortune     .      .      .      .118 

-H.      VII  The  Carnegie  Fortune 147 

^      VIII  Wealth  in  Possession      ......  167 

IX  Land 174 

X  Luxuries 201 

XI  A  Logical  Consequence — Who  Pays  Taxes  ?  245 


I3r  ^u\)nt  gierome  €DDr 

"  The  Law  of  Combinations." 
*'  Two  Thousand  Miles  on  an  Automobile.'- 
''Delight,  the  Soul  of  Art." 
''Recollections  and  Impressions 

of  James  A.  McNeill  Whistler." 
"Ganton&Co." 
"Tales  of  a  Small  Town." 
' '  The  New  Competition. ' ' 
* '  Cubists  and  Post-Impressionism. ' ' 


PREFACE 

The  manuscript  of  the  following  pages  was 
completed  and  prepared  for  publication  just 
before  the  death  of  the  author,  which  occurred 
in  New  York  on  July  21, 1920. 

Any  man  who  is  concerned  with  the  funda- 
mentals of  thought  in  any  department — whether 
in  philosophy,  morals,  politics,  religion,  the 
physical  sciences,  or  art  —  grows  weary  of  the 
multitude  of  books  which  only  thresh  over 
again  the  straw  of  old  ideas,  and  contribute 
nothing  of  vitally  new  suggestion  toward  solv- 
ing the  problems  of  our  life.  But  now  and 
again  it  happens  that  one  comes  upon  a  book 
which  bears  the  impress  of  really  independent 
vision  and  original  thought.  Then  one  knows 
that  one  has  found  a  teacher,  a  leader. 

Such  a  teacher  and  intellectual  leader  was 
Arthur  Jerome  Eddy.  The  originality  of  his 
ideas  is  as  surprising  as  the  ease  and  clear- 
ness with  which  he  expressed  them,  and  the 
number  of  fields  in  which  he  was  a  master. 

His  leading  quality  was  a  certain  alert  open- 
ness of  soul,  a  youthful  responsiveness  to  the 
challenge  of  new  ideas,  new  experiments,  new 


Preface 

valuations.  His  writings  are  full  of  tliis  spirit 
of  generous  acceptance,  balanced  by  a  splendid 
sanity,  wliich  never  allowed  the  enthusiasm  of 
welcome  to  overbear  a  sound  critical  judgment. 

So  intensely  individual  is  his  method  of 
analysis  that  the  reader  feels  as  though  he 
were  seeing  for  the  first  time  the  subject  of 
which  the  author  treats.  His  books  on  eco- 
nomic and  social  problems,  and  their  ethical 
implications,  carry  to  the  mind  of  every  in- 
structed reader  the  conviction  of  their  large 
and  lasting  significance. 

In  The  New  Competition,  and  in  this  boo"k 
on  Property,  Mr.  Eddy  recognizes  many  evils 
that  the  conservative  is  usually  unwilling  to 
admit.  He  condemns  many  existing  practices 
in  business  as  being  immoral,  inhuman,  and 
at  the  same  time  uneconomic,  inefficient,  and 
unnecessary.  He  would  probe  the  conscience 
of  the  man  of  business.  He  will  not  tolerate 
the  perpetuation  of  the  standards  of  the  jungle, 
nor  permit  men  to  defend  them  by  the  parrot- 
cry  that  struggle  is  the  law  of  life.  But 
instead  of  counselling  the  destruction  of  the 
entire  competitive  system  and  the  substitution 
of    some    new     and     inherently    unworkable 


Preface 

scheme,  woven  out  of  the  large  inexperience  of 
the  utopist,  Mr.  Eddy  challenges  the  existing 
order  to  do  ivhat  it  claims  to  do,  and  to  show 
its  capacity  for  self-reformation. 

His  remedy  for  many  of  the  underhanded 
tricks  that  still  prevail  in  the  industrial  world 
is  simply  open  competition  —  honorable  rivalry 
on  the  basis  of  full  exchange  of  information 
among  the  competitors  and  their  customers 
and  employees.  He  would  move  in  the  opposite 
direction  to  that  which  the  law  so  unfortu- 
nately followed  when  it  undertook,  by  the  Sher- 
man Act  and  subsequent  legislation,  to  perpet- 
uate competition  of  the  jungle  type,  and 
prevent,  in  ordinary  businesses,  that  rational 
cooperation  which  the  law  itself  has  since  been 
compelled  to  establish  among  the  railroads. 

The  underlying  principle  of  Mr.  Eddy's  theo- 
ries of  competition  and  property  is  this  —  that 
all  business  exists  for  the  service  of  the  com- 
munity. Certain  great  human  needs  must  be 
met,  either  by  the  voluntary  labor  and  cooper- 
ation of  individuals,  or  by  the  action  of  the 
community  through  the  state.  The  socialist 
would  have  the  state  do  everything.  His 
opponent  maintains  that  the  community  is  bet- 


Preface 

ter  served  by  what  is  called  ' '  private  enter- 
prise," because,  in  tlie  latter,  those  who  under^ 
take  the  service  assume  the  risk.  Their  own 
success  or  failure  is  inexorably  bound  up  with 
that  of  their  undertakings.  The  blunders  and 
miscarriages  of  the  state  do  not  involve  the 
loss  and  failure  of  the  officials  responsible  for 
them.  The  money  used  in  state  undertakings 
is  not  the  property  of  those  who  handle  it. 
That  is  why  they  are,  in  general,  careless,  lax, 
and  wasteful  in  their  dealings  with  it. 

Mr.  Eddy  is  at  his  best  in  dealing  with  the 
alleged  ' '  natural  right ' '  to  property.  His 
criticism  of  Henry  George's  attempt  to  estab- 
lish a  distinction  between  property  in  land  and 
property  in  things  is,  to  my  thinking,  unan- 
swerable. There  is  no  ' '  natural  right ' '  to 
property  of  any  description.  The  right  to  any 
property  whatsoever  is  conferred  by  society. 
Its  basis  is  not  in  nature,  but  in  social  expedi- 
ency. The  community  permits  each  of  us  to 
enjoy  exclusive  control  over  certain  parcels  of 
land  and  things  because  —  and  only  because  —  it 
gets  more  efficient  service  out  of  such  land  and 
things  than  it  otherwise  could. 

Mr.  Eddy's  strength,   and  that  which  con- 


Preface 

stitutes  his  clearest  title  to  a  hearing,  is  the 
fact  that,  being  an  idealist,  he  was  also  a  man 
of  immense  practical  experience.    A  lawyer  by\ 
profession  —  declared  by  the  highest  authorities 
to  have  been  one  of  the  most  brilliant  at  the 
American  bar — he  had  devoted  years  of  work  , 
to  the  organization  of  great  business  undertak-  / 
ings.      He    pointed    out    the    path    on    which 
advance  is  actually  taking  place.    He  was  no 
unpractical  radical  theorist. 

His  finest  insight  is  his  clear  perception  that 
the  evils  which  afflict  society  are,  after  all,  due 
not  to  external  conditions,  but  to  unpurged  / 
defects  in  human  nature  itself.  He  is  well' 
aware  that  these  defects  would  produce  similar 
or  worse  evils  in  any  system  that  could  con- 
ceivably be  substituted  for  the  present  one. 
Deceit,  unfair  competition,  stupidity,  under- 
handed dealing,  inhuman  lack  of  consideration 
for  one's  neighbor  —  these  are  faults  inher- 
ent in  human  nature,  not  in  ' '  capitalism. ' '  They 
are  not  produced  by  the  profit-seeking  motive, 
nor  are  they  remedied  by  merely  taking  that 
motive  away.  Human  nature,  with  its  faults  and 
virtues,  is  vastly  independent  of  its  surround- 
ings.   It  makes  them ;  it  is  not  made  by  them.    It 


Preface 

can  vitiate  or  ennoble  any  social,  industrial, 
or  political  order.  Expellas  furcd  —  even  the 
fiirca  of  communism  or  socialism  —  tamen 
usque  recurret. 

The  appreciation  of  Mr.  Eddy's  teachings, 
and  his  fame  as  a  constructive  thinker,  will 
continue  to  increase  as  his  thought  —  so  far  in 
advance  of  his  time  —  conquers  the  attention  to 
which  its  worth  entitles  it. 

To  all  who  knew  him,  Mr.  Eddy's  death  was 
an  inexpressible  personal  loss;  to  his  country 
it  was  the  loss  of  a  great  intellectual  and  moral 
asset.  From  such  radiant  spirits  as  his  we 
catch  the  faith  that  makes  progress  possible. 

Horace  J.  BRmoES. 
Chicago,  June,  1921. 


Property 


PROPERTY 

I 
INTRODUCTION 

*'  Qu  'est-ce  que  la  proprietef  '^  (AMiat 
is  property?) 

'^  La  propriete,  c'est  le  vol."  (Prop- 
erty is  theft.)    >) 

Proudhon''s  famous  question  and  answer  are 
at  tlie  basis  of  modern  communistic  theories. 

If  it  be  true  that  property  is  theft,  then 
property  rights  should  be  abolished. 

But,  the  historical  fact  is  that  the  develop- 
ment of  property  rights  has  steadily  accom- 
panied the  progress  of  mankind. 

Communities,  peoples,  nations  have  attained 
strength  and  prosperity  precisely  to  the  extent 
they  have  extended  the  rights  of  the  individual 
to  control  not  only  the  fruits  of  his  own  labors, 
but  —  in  the  sense  of  guiding  and  managing  — 
the  fruits  of  the  labors  of  others. 

If  '*  property  is  theft,"  progress  is  based  on 
injustice. 

The  extreme  socialist,  communist,  or  anar- 
1 


2  Property 

chist,  does  not  shrink  from  this  conclusion — 
that  progress  and  our  entire  civilization  are 
based  upon  injustice/ 

But,  how  can  justice  come  out  of  injustice? 
How  can  progress  come  out  of  wrong? 

The  very  terms  of  the  question  force  the  con- 
clusion that  we  are  deceived  regarding  either 
the  ivrong  or  the  progress. 

If  there  has  been  true  progress  its  basis  has 
been  right;  if  the  fundamental  institution  of 
society  —  property — is  really  wrong  then  there 
has  been  no  true  progress. 

There  are  three  ways  out  of  the  dilemma: 

1.  Property  is  right  and  progress  real. 

2.  Property  is  wrong  and  progress  unreal. 

3.  Property    is    both    right    and    wrong; 
progress  is  both  real  and  unreal. 

Most  men  argue  so  strongly  in  favor  of  the 
first  proposition  that  property  rights  are  held 

*  It  should  be  noted  and  conceded  in  passing  that  the 
debate  often  turns  on  the  definition  and  conception  of  the 
word  "  progress  " —  one  side  taking  it  in  its  mere  material 
sense,  the  other  in  its  more  cultural  and  ideal  sense,  deny- 
ing the  world  has  spiritually  and  ideally  progressed  not- 
withstanding its  apparent  material  prosperity;  obviously 
that  debate  admits  of  no  definite  conclusion,  it  being  a 
conflict  of  sentiments,  opinions,  convictions. 


Introduction  S 


by  them  to  be  sacred,  almost  as  sacred  as  a 
man's  right  to  his  life. 

Comparatively  few  men  argue  in  favor  of 
the  second  proposition ;  even  Proudlion  was 
obliged  to  admit  that  though  he  considered 
property  theft,  still  it  was  an  institution  that 
could  not  be  disturbed  suddenly. 

An  increasing  number  of  thinkers  hold  that 
while  the  institution  of  property  has  been  on 
the  whole  a  vital  factor  in  the  progress  of  man- 
kind it  is  by  no  means  perfect,  and,  like  every 
social  institution,  is  open  to  criticism  and  cor- 
rection, 

♦>    ♦    ♦ 

In  short,  property  is  not  the  evil  it  is  said  to 
be,  otherwise  progress  would  not  be  so  real  as 
it  imdoubtedly  has  been. 

On  the  other  hand  true  progress  may  have 
been  checked  because  of  imperfect  or  over- 
recognition  of  property  rights. 

All  of  which  leads  to  the  conclusion  that  the 
first  duty  of  the  man  who  would  reform  society 
is  to  clear  up  his  ideas  regarding  property. 

It  is  easy  enough  to  say,  **  Property  is 
theft,"  but  difficult  to  prove  the  assertion. 


4  Propertfj 

It  is  easy  enough  to  say,  **  Property  is 
sacred,"  but  equally  difficult  to  prove  it  so. 

The  truth  probably  lies  between  the  two  ex- 
treme positions  —  property  is  neither  theft  nor 
sacred,  it  is  just  human,  and,  like  all  things 
human,  imperfect. 

♦  ♦    ♦ 

To  say  "Property  is  theft,"  is  like  saying 
**  Law  is  crime."  But  every  paradox  contains 
some  truth. 

♦  ♦    ♦ 

At  the  very  outset  of  any  consideration  of 
the  matter  of  accumulation  and  distribution  of 
wealth,  we  are  met  by  prejudices  that  stand  in 
the  way  of  cool,  patient,  and  thorough  investi- 
gation. 

The  greatest  of  these  prejudices  is  that  of 
the  man  who  has  less  against  the  man  who  has 
more  simply  because  Tie  has  more. 

The  names  of  Rothschild  and  Rockefeller  are 
sweet  morsels  in  the  mouth  of  the  ranting 
socialist,  communist,  and  anarcliist;  the  phdl- 
osopMcal  socialist,  communist,  and  anarchist 
should  be  above  that  sort  of  thing,  but  even  he 
cannot  refrain  from  pointing  to  some  huge  for- 


Introduction 


tune  as  if  mere  size  of  some  man's  fortmie 
added  force  to  Ms  argument. 

Logically  speaking  whether  a  man  has  a  bil- 
lion, or  a  million,  or  ten  thousand  matters  not 
so  long  as  he  has  more  than  the  average. 

In  fact  a  billion  in  the  United  States  may 
mean  less  to  the  community  than  a  hundred 
thousand  in  a  remote  colony. 


The  story  is  told  that  one  day  a  man  rushed 
up  to  Rothschild  and  exclaimed  angrily: 

**  You  have  a  million  pounds." 

**Welir' 

**  You've  no  right  to  so  much  money." 

*' Who  should  have  it?" 

**  The  people." 

*'  Of  England  or  the  world?  " 

"Of — of  the  world,"  the  man  faltered. 

*'A11  right,  take  your  share  out  of  this  and 
distribute  the  balance  where  it  belongs,"  and 
the  banker  handed  the  man  a  penny. 

♦    ♦    ♦ 

Rockefeller's  alleged  billion  distributed 
among  the  people  of  the  United  States  would 


6  Property 

give  each  man,  woman,  and  child,  less  than  ten 
dollars. 

That  would  not  go  far  toward  eliminating 
poverty. 

Then,  too,  by  what  right  would  the  people  of 
the  United  States  exclude  other  nations  and 
races  from  participating  in  the  distribution? 
The  money  of  the  Standard  Oil  Company  has 
been  drawn  from  the  four  quarters  of  the  globe. 

And  if  the  people  of  the  United  States  may 
exclude  other  nations  and  races  from  partici- 
pating, why  may  not  the  people  of  Ohio,  where 
the  company  started,  exclude  the  people  of 
Illinois,  Alaska,  Hawaii? 

♦    ♦    ♦ 

In  the  United  States  some  cities  and  some 
states  are  far  richer  than  others.  In  the  world 
some  nations  and  some  lands  are  far  richer 
than  others. 

If  there  is  to  be  an  equalization  of  wealth 
where  shall  the  distribution  end? 

The  people  of  New  York  State  make  their 
money  with  the  aid  and  cooperation  of  not  only 
all  the  other  states  but  of  Canada,  Europe,  and 
more  distant  countries. 


lutrodnction 


The  people  of  the  United  States  aecumulate 
wealth  by  the  direct  cooperation  of  all  other 
peoples  to  the  remotest  races  of  darkest  Africa. 

Whatever  our  v/ealth,  it  is  due  to  the  exer- 
tions and  sacrifices  of  others  as  well  as  our- 
selves. 

It  follows,  therefore,  that  a  perfectly  just 
distribution  cannot  be  made  within  the  con- 
fines of  a  single  nation,  any  more  than  within 
the  confines  of  a  single  state,  city,  or  village. 
The  thorough-going  communist  must  be  con- 
sistent; he  must  urge  the  white  farmers  and 
workmen  of  the  northern  states  to  share  their 
homes  and  farms  with  the  ten  million  negroes 
of  the  South. 

Between  the  existing  distribution  with  all  its 
inequalities  and  any  scheme  of  distribution 
that  falls  short  of  taking  into  consideration  all 
mankind  the  result  would  be  simply  a  differ- 
ence in  the  degree  of  injustice. 
»*•    <>*•    «** 

The  most  thorough-going  communist  is  will- 
ing to  divide  his  neighbor's  goods,  he  may  even 
be  willing  to  divide  his  own  —  if  he  has  any, 
but  he  is  thoroughly  selfish  when  it  comes  to 


8  Propcrtjj 

sharing  his  country's  goods  with  the  rest  of 
the    world,    with    the    millions    of    Asia    and 

j     Africa,   not  to   overlook  the  Esquimaux   and 
South  Sea  Islanders,  who  are  also  our  brothers 

j     in  theory  if  not  in  law. 

Communism,  and  most  other  projects  for  re- 
form, begin  and  stop  at  home. 

♦    ♦>    ♦ 

While  the  suggestion  to  distribute  equally 
the  wealth  of  the  United  States  among  the  peo- 
ple of  the  United  States  may  arouse  some  — 
not  much  as  a  matter  of  fact  —  interest  among 
those  who  have  less  than  the  per  capita  aver- 
age, it  arouses  no  enthusiasm  whatsoever 
among  those  who  have  more;  while  the  sug- 
gestion that  the  distribution  should  be  carried 
to  its  logical  extreme  and  the  wealth  of  this 
country  be  cast  in  one  common  fund  for  dis- 
tribution to  the  entire  world,  would  arouse 
simply  ridicule. 

In  short  it  may  be  human  nature  to  like  to 
share  the  fortunes  of  others,  but  it  is  not 
human  nature  to  cheerfully  relinquish  to  stran- 
gers and  enemies  what  we  consider  our  own. 


Introduction  9 


Ask  the  average  farmer  if  he  would  favor 
dividing  up  Rockefeller's  fortune  among  those 
who  have  less,  and  he  might  answer,  ''  Yes." 

Ask  him  if  he  would  favor  sharing  his  farm 
with  those  who  have  nothing  and  he  would 
surely  reply,  **  No." 


This  human  weakness  in  favor  of  despoiling 
the  other  fellow  is  illustrated  in  the  provisions 
of  the  income  tax  laws  of  this  and  other  coim- 
tries,  wherein  small  incomes  are  exempt  or  sub- 
jected to  low  taxes,  and  large  incomes  are  pro- 
gressively seized  by  ingeniously  devised  sur- 
taxes. 

Suggestions  are  made  to  so  increase  the  sur- 
taxes on  incomes  and  estate  or  inheritance 
taxes  as  to  practically  confiscate  large  incomes 
and  large  fortunes.  In  other  words  to  utilize 
the  taxing  power  to  equalize  fortunes. 

Most  of  these  suggestions  are  opposed  by 
reasoning  that  is  far  more  fallacious  than  that 
urged  in  support  of  them.  They  are  denounced 
as  demagogical,  which  is  true,  but  that  charge 
is  cheap,  easily  made  and  has  nothing  to  do 
with  the  merits,  if  any,  of  the  suggestions. 


10  Property 

They  are  opposed  as  revolutionary,  radical, 
socialistic,  etc.,  etc.,  but  these  epithets  simply 
obscure  the  real  issue ;  they  settle  nothing. 

Not  a  few  objections  are  based  upon  a  denial 
of  the  government's  right  to  confiscate  all  or  a 
portion  of  a  man's  income,  but  that  position  is 
hopelessly  untenable.  If  the  government  can 
collect  a  graduated  income  ta,x,  increasing  from 
one  to  sixty  per  cent,  it  can  mal^e  the  gradua- 
tion from  one  to  one  hundred  per  cent.  There 
is  no  limit  to  the  rigM. 

Constitutional  objections  might  be  urged  in 
this  country,  but  such  objections  at  most  would 
simply  mean  the  amending  of  constitutions, 
and  the  definite  assertion  of  rights  denied. 

The  power  resides  in  the  people  and  they 
may  do  as  they  please  with  laws  and  constitu- 
tions.^ 


*  Here  again  is  a  generalization  that  would  require  a 
small  volume  to  qualify  properly.  Profoundly  speaking  it 
is  far  from  true  to  say  "  the  power  resides  in  the  people 
to  do  as  they  please  with  laws  and  constitutions."  It  is 
even  truer  to  say  "  the  people  are  poiverless  to  do  as  they 
please  with  laws,  constitutions,  institutions,"  as  powerless 
as  they  are  to  alter  their  language,  habits,  modes  of 
thought,  etc.,  overnight.  V/e  live  under  governments  and 
social  conditions  that  have  slowly  developed  through  the 
centuries.     We  may  jostle  them  by  revolutions,  we  rnay 


Introduction  11 


/ 


The  man  who  asserts  his  right  to  hold  either 
all  or  any  part  of  his  property,  on  the  ground 
the  community  has  no  right  to  interfere  with 
him,  destroys  the  basis  of  his  argument  in  that 
he  takes  away  the  very  foundation  of  all  rights 
the  assent  of  the  conununity. 

If  no  better  arguments  can  be  urged  in  favor 
of  large  incomes,  then  those  who  have  them 
might  just  as  well  make  up  their  minds  to  lose 
them.  But  the  reason  why  large  incomes  have 
not  been  confiscated  long  ago  is  because  there 
are  economic  reasons  for  their  existence,  and 
these  reasons  have  controlled  throughout  the 
ages,  though — curiously  enough  —  they  have 
never  been  systematically  set  forth. 
♦    ♦    ♦ 

If  ' '  swollen  fortunes ' ' —  as  the  phrase  goes 
—  are  an  economic  evil  it  is  clumsy  and  ineffec- 
tive to  attempt  to  remedy  the  evil  by  such 
crude  devices  as  inheritance  and  income  taxes ; 

modify  them  by  wise  action,  but  to  say  they  are  subject 
to  our  will,  our  caprice,  is  to  say  what  is  obviously  not  so. 
However,  for  the  purposes  of  the  argument  in  this  book 
it  may  be  conceded  the  people  have  the  power  to  do  as 
they  please  with  laws,  constitutions,  institutions,  that  they 
may  do  what  they  please  regarding  all  so-called  property 
rights. 


IS  Property 

as  clumsy  and  ineffective  as  if  the  state  at- 
tempted to  remedy  'piracy,  not  by  suppressing 
it,  but  by  taking  part  of  the  plunder. 

The  "  swollen  fortune  "  is  a  fact  in  our  eco- 
nomic development. 

There  may  be  but  one  hilUonaire  but  there 
are  any  number  of  millionaires,  thousands  of 
Jiundred-thousandaires  and  hundreds  of  thou- 
sands ten-tJiousandaires. 

From  the  point  of  view  of  the  man  who  has 
nothing,  an  American  farmer  with  ten  thousand 
has  a  "  swollen  fortune,"  and  it  is  swollen  far 
beyond  the  farmer's  pro  rata  share  of  the 
country's  wealth. 

The  "  swollen  fortune  "  is  not  a  thing  of  ab- 
solute magnitude,  but  entirely  a  matter  of  com- 
parative size. 

♦     <8»     ♦ 

To  repeat: 

Inequality  in  the  distribution  of  wealth  is  a 
fact,  a  very  stubborn  fact,  in  the  economic  de- 
velopment of  all  mankind. 

There  has  never  been  a  time  in  the  history 
of  the  human  race  w^lien  some  individuals  did 
not  have  more  than  others. 


Introduction  13 

To  find  anyilamg  lilve  a  theoretical  holding  of  |  . 
things  in  common  one  must  resort  to  the  insect  ^ 
world,  and  even  there  and  in  the  animal  king- 
dom there  is  a  more  or  less  well-defined  asser- 
tion of  ownership  by  the  individual  or  the  col- 
ony to  the  exclusion  of  others,  even  to  the  kill- 
ing and  slaughtering  of  others. 

Even  a  theoretically  pure  commujiism  could 
not  avoid  the  follo^\dng  inequalities  in  the  dis- 
tributions of  the  accumulated  wealth  of  the 
community : 

A.  The  wealth  of  one  community  as  com-    \ 
pared  with  the  wealth  of  other  nations, 
peoples,  and  races. 

B.  The  greater  wealth  of  some  localities     j 
as  compared  with  that  of  others. 

C.  Inequalities  in  the  distribution  of  com- 
munity advantages,  such  as  public 
buildings,  properties,  industries  neces- 
sarily localized,  railroads,  highways, 
universities,  museums,  etc.,  etc. 

In  short  the  most  abstractly  ideal  conmaunity 
could  not  surround  each  individual  with  pre- 
cisely the  same  convenience  and  comforts.  How 
to  deal  with  those  individuals  who  do  the  hard 


14  Pro  pert]] ^^ 

and  dirty  work  and  place  them  on  a  plane  of 
equality  with  those  who  do  the  light  and  pleas- 
ant has  troubled  every  philosopher  who  has 
ever  tried  to  devise  a  utopia ;  if  you  give  them 
larger  returns  inequality  immediately  results 
— the  adjustment  would  be  impossible. 

♦      ♦>      ♦!♦ 

If  the  ideal  community  should  make  its  capi- 
tal or  any  one  city  more  attractive  than  an- 
other, or  should  indulge  in  a  single  expense  for 
the  purpose  of  making  life  more  agreeable  in 
any  locality,  or  more  agreeable  for  one  man, 
woman,  or  child  than  for  another  there  is  in- 
equality of  distribution  of  advantages  which  is 
practically  the  same  as,  and  theoretically,  more 
unjust  than,  inequality  in  the  distribution  of 
private  property. 

All  dreams  of  great  and  glorious  communi- 
ties, states,  commonwealths,  wherein  private 
property  does  not  exist,  and  everything  is  held 
in  common,  involve  inequalities  in  the  distribu- 
tion of  advantages  and  pleasures  that  are  fully 
as  great  as  any  that  now  exist. 

That  is  to  say,  the  greater  the  glories  of  the 
Utopia  the  greater  the  concentration  of  advan- 


Introduction  15 


tages  in  favored  localities  —  in  the  spotlights 
of  the  dream.  A  ntopia  with  no  concentration 
of  advantages,  no  great  cities,  no  great  build- 
ings, monuments,  museums,  pleasure  resorts, 
theaters,  orchestras,  etc.,  etc.,  would  not  be  a 
Utopia  to  fire  the  imagination. 

It  must  not  be  forgotten  that  to  the  man  in 
the  coal  mine,  to  the  man  ploughing  the  field, 
to  the  negro  in  the  cotton  fields,  to  the  miner 
in  Alaska,  to  the  sailor,  the  fisherman,  the 
stoker  in  the  hold,  the  collector  of  garbage,  all 
the  gorgeous  and  beautiful  buildings,  amuse- 
ments, and  enterprises  of  the  Utopian  common- 
wealth would  be  as  remote  and  unrelated  as 
are  the  buildings  and  pleasures  of  existing 
states  and  commonwealths ;  they  would  read  of 
them  but  never  enjoy  them. 


Furthermore  it  must  not  be  forgotten  in  this 
connection  that  inequality  is  the  law  of  life. 

Perfect  equality,  if  attainable,  would  mean 
stagnation,  death;  a  placid,  rippleless  sea;  a 
currentless,  motionless  air;  a  still  and  silent 
universe. 


16  Property 

The  sliglitest  action,  change,  growth,  devel- 
opment, means  disturbance  of  equality. 

It  is  idle  to  talk  of  equality  between  youth 
and  age,  men  and  women,  race  and  race,  the 
feeble  and  the  strong,  the  fool  and  the  wise 
man. 

The  truth  is  two  human  beings  cannot  be 
found  w^ho  are  equal  in  all  respects,  equal  in 
physical  and  mental  equipment;  in  desires, 
emotions,  impulses;  above  all  in  those  subtle 
qualities  that  go  to  make  up  what  we  call  'per- 
sonality. 

Thinking  men  who  admit  this  seek  refuge 
from  the  consequences  of  the  admission  by  say- 
ing that  what  is  meant  by  ''equality"  is 
''  equality  before  the  laiv,"  a  sounding  phrase 
that  is  used  to  discourage  further  inquiry  and 
analysis,  but  wliich  means  nothing. 

Men  are  no  more  equal  before  the  law  than 
in  other  respects,  and  to  the  extent  the  law 
treats  them  as  equal,  recognizes  no  distinction 
between  the  weak  and  the  strong,  the  stupid 
and  the  intelligent,  the  confiding  and  the  crafty, 
to  that  extent  is  the  law  both  blind  and  defi- 
cient. 


Introduction  17 


The  law  commits  its  most  frightful  errors 
when  it  fails  to  take  into  consideration  the  per- 
sonal equation. 

***    »*•    •** 

The  men  who  are  most  virulent  against  in- 
equality of  wealth  are  usually  quite  complacent 
toward  inequality  of  authority;  many  of  them 
claim  and  exercise  the  most  despotic  authority 
over  their  followers;  all  of  them  are  most  in- 
tolerant of  opinions  that  differ  from  their  own. 

Karl  Marx,  for  instance,  w^as  so  intolerant 
of  opposition  or  rivalry  that  when  his  control 
of  the  International  Working-men's  Association 
was  threatened  he  deliberately  wrecked  the  As- 
sociation. 

As  between  inequality  measured  in  dollars 
and  inequality  measured  in  authority,  the  lat- 
ter has  probably  done  the  world  incomparably 
more  harm — and  good. 

The  power  of  the  man  of  money  over  the 
man  who  has  none  is  nothing  as  compared  with 
the  power  of  the  man  who  has  will-power  over 
the  man  who  has  none — the  latter  is  the  blind 
and  helpless  slave  of  the  former,  to  the  doing 
of  murder. 


18  Property 

Of  all  dogmatic  and  tyrannical  teachers  of 
men,  the  socialists,  anarchists,  and  radical  re- 
formers generally,  have  ever  been  and  are  the 
most  intolerant  and  despotic. 

Leaders  of  labor  unions  exercise  powers  that 
few  generals  on  a  battle  field  possess,  for 
troops  may  hang  back  or  run,  but  unionists 
seldom  fail  to  strike,  fight,  and  starve  at  the 
command  of  their  leaders. 
♦    ♦     ♦ 

The  point  of  all  this  is  that  inequality  is  not 
confined  to  the  distribution  of  wealth ;  it  exists 
everyivliere^^  in  the  family,  the  school,  the 
church,  the  city,  the  state;  in  politics  and  in 
every  profession ;  some  men  get  on  faster  than 
others,  and  the  great  majority  in  every  walk  of 
life  is  ever  looking  up  to  and  following  a  small 
minority,  and,  it  is  a  curious  fact,  in  every  walk 
of  life  except  that  of  making  money,  the  ma- 
jority is  proud  of  the  achievements  of  the 
minority — proud  of  the  inequality  that  dis- 
tinguishes the  leaders. 


^&' 


The  unlmown  doctor,  lawyer,  minister,  pro- 
fessor,  does   not   desire   the   levelling  of  the 


Introduction  19 


famous  members  of  his  profession ;  his  one  am- 
bition is  to  achieve  something  of  their  success. 

The  workman  in  a  factory  does  not  desire  \ 
the  levelling  of  the  foreman,  the  superintendent, 
the  men  who  are  above  him  by  reason  of  their 
ability  to  direct;  on  the  contrary  he  is  ambitious 
to  advance  to  their  positions. 

Government  employees  range  in  rank  from 
the  president  down  to  the  humblest  janitor,  but 
not  a  soul  in  the  employ  of  the  government 
dreams  of  the  possibility  of  the  levelling  of  all 
ranks,  of  the  arbitrary  placing  of  the  janitor 
on  the  same  level  of  pay  and  authority  with  the 
president ;  on  the  contrary  the  normal  ambition 
of  all  is  to  rise  from  rank  to  rank  —  in  short  to 
systematically  perpetuate  the  scheme  of  in- 
equality. 

No  socialistic  community  has  ever  been  sug- 
gested wherein  there  would  not  be  the  same 
gradations  of  office  and  authority,  the  same 
inequalities  between  man  and  man,  and  the 
same  rivalry  and  strife  to  advance  in  rank  and 
authority.^ 

^  The  late  Czar  exercised  no  such  despotic  power  as  that 
wielded  by  Lenine  and  Trotsky.  And  so  far  from  abolishing 
classes,  the  Russian  revolution  hag  simply  created  an  interest- 


20  Property 

At  most  the  socialist  and  communist  would 
simply  level  some  of  the  inequalities  of  wealth. 

Well,  inequalities  of  wealth  are  among  the 
least  of  the  world's  troubles. 

Inequalities  of  wealth  alone  have  never  pro- 
duced a  revolution,  never  overturned  a  govern- 
ment, never  caused  a  war/ 

Inequalities  of  rank,  power,  privilege,  are 
the  inequalities  that  stir  men  to  revolution  and 
bloodshed.  Inequalities  of  wealth  may,  and 
usually  do,  accompany  these  other  inequalities ; 
but  not  always  and  necessarily,  and  never  as  a 
cause. 

Inequalities  of  rank,  power,  privilege,  are 
inherent  in  men,  in  church  and  state,  in  labor 
unions  and  political  parties,  in  sports  and 
wars,Jand  it  is  this  personal  equation  that  leads 
to  inequalities  in  the  distribution  of  wealth, 
and  not  vice  versa. 

In  short,  were  it  possible  to  correct  today,  by 
some  magic  stroke,  all  the  inequalities  in  the 
distribution  of  material  things  —  wealth  —  those 

ing  assortment  of  new  ones. 

'  To  this  generalization  —  true  as  regards  wealth  gen- 
erally —  must  be  noted  the  exception  of  gross  inequalities 
in  land  ownership,  they  do  cause  discontent  of  revolu- 
tionary magnitude. 


Introduction  21 


otlier  inequalities  would  instantly  begin  anew 
the  work  of  redistribution,  the  stronger  appro- 
priating more  or  less  of  the  pro  rata  share  of 
the  weaker;  just  as  the  head  of  any  body  —  say 
the  leader  of  a  labor  union  —  is  paid  more,  and 
has  more  than  any  one  of  his  followers,  because 
Lis  services  are  worth  more  and  it  is  economy 
to  make  it  an  object  to  him  to  devote  all  his 
time  to  the  organization. 

It  sometimes  happens  a  great  leader  is  will- 
ing to  devote  his  energies  to  the  state,  to  his 
organization,  to  a  cause  for  the  glory  there  is 
in  the  work  and  with  no  greater  compensation 
than  that  of  a  day  laborer,  but  these  instances 
are  few  and  as  a  rule  his  followers  will  not  per- 
mit it;  they  instinctively  recognize  the  truth 
that  the  power  and  efficiency  of  the  leader 
depends  not  a  little  upon  appearances,  that  he 
can  do  better  work  if  he  does  not  live  as  a  day 
laborer,  but  keeps  somewhat  aloof.  In  other 
words  a  general's  uniform  is  a  time-saving 
device;  without  it  the  general  would  have  to 
demonstrate  his  right  to  leadership  to  every 
new  recruit.  The  policeman's  badge  saves  a 
lot  of  questions. 


^2  Property 

The  American  people  pride  themselves  on 
being  democratic,  yet  they  would  not  consider 
it  wise  or  economical  to  have  their  President 
live  in  a  three-room  shack  on  the  banks  of  the 
Potom^ac,  or  even  in  a  six-room  flat  on  one  of 
the  side  streets  of  Washington,  though  in 
either  case  he  might  be  consuming  far  more 
than  his  fro  rata  share  of  the  wealth  of  the 
country. 
,  Perhaps  it  is  fortunate  for  those  who  enjoy 
inequalities  of  rank,  power,  privilege,  that  the 
minds  of  the  people  are  diverted  to  the  discus- 
sion of  inequalities  of  wealth,  for  so  long  as 
only  inequalities  of  wealth  are  assailed,  the 
unjustly  poiverful  are  safe. 

It  is  amusing  to  see  how  Congress  and 
political  bodies  generally  are  quick  to  divert 
public  attention  from  their  own  shortcomings 
by  springing  investigations  of  rich  corpora- 
tions and  individuals. 

No,  the  problem  is  prof ounder  than  the  mere 
distribution  of  dollars. 

♦    ♦>     ♦ 

The  fatal  defect  of  every  utopian  com- 
munity devised  by  philosopher  or  dreamer  is 


Introduction  23 


that  it  is  based  on  the  assumption  of  physical,  I 
mental  and  emotional  equality  of  individuals,  /' 
whereas  the  truth  is  that  men  and  women  are 
all  born  helpless  and  many  grow  up  so  helpless 
and   incompetent    that    as    against    them   the 
others  must  assert  authority  over  their  food, 
clothing,  property,  even  their  persons.    So  that 
in  even  the  ideal  community  the  rights  of  indi- 
viduals to  participate  in  the  control  and  distri- 
bution of  property  depend  first  of  all  upon  age; 
secondly,    upon    a    development    of   physical, 
mental  and  moral  strength  —  three  vital  fac- 
tors,  concerning  which  the   judgment   of  the 
active  majority  is  conclusive. 
♦    ♦    ♦ 

Rights,  then,  are  of  practical  origin  and 
development  rather  than  of  theoretical.    . 

It  is  easy  to  lay  down  abstract  propositions  » 
of  great  beauty  and  seeming  truth,  but  men 
differ  so  widely  in  their  physical,  mental  and 
moral  attributes  that  the  abstract  propositions 
do  not  fit. 

Imagine  a  community  wdierein  all  persons 
were  of  the  same  physical,  mental  and  moral 
development,  possessed  the  same  rights  —  equal . 


24  Property 

to  no  rig'lits  at  all;  wherein  there  was  no  need 
for  government,  because  of  no  human  weak- 
nesses and  shortcomings;  wherein  there  were 
no  strifes,  struggles,  failures,  successes,  but 
life  was  one  long,  bright  June  day — life  in 
such  a  conmiunity  would  be  so  deadly  monoto- 
nous it  would  not  be  worth  living. 
♦    ♦    ♦ 
But,  though  we  assume  that  on  account  of 
man's  imperfections  inequality  of  fortune  is  an 
economic  condition  that  is  essential  to  economic 
progress,  it  by  no  means  follows  that  such 
inequality  is  a  good  thing  to  be  encouraged  j  on 
the  contrary  as  it  is  the  direct  outcome  of  the 
weaknesses  and  imperfections  of  mankind  it 
should  be  minimized,  or  at  least  confined  within 
as  narrow  limits  as  human  imperfections  admit. 
Private  property,  with  its  resulting  inequality 
in  the  distribution  of  wealth,  is  essentially  a 
^     human  institution  in  the  same  sense  govern- 
(     ment  is  a  human  institution,  and  like  the  degree 
of  government  its  development  depends  entirely 
upon   human    necessities.     There   is   nothing 
sacred  about  it,  it  is  subject  to  the  •will  of  man, 
\u  and  the  very  fact  that  man  has  not  abolished  it 


Introducfion  25 


long  ago,  notwithstanding  the  railings  and 
arguments  against  it,  is  proof  positive  that  he 
knows  of  no  better  device  to  take  its  place. 

Private  property  is  not  a  popular  institution 
from  the  point  of  view  of  the  masses,  but  it  is 
inevitable,  and  even  the  masses  have  their 
property  rights  which  they  would  not  surrender 
without  a  fight. 

♦    ♦    ♦ 

We  have,  then,  this  curious  condition,  one  of 
the  basic  institutions  of  society  is  denounced  as 
responsible  for  most  of  the  miseries  of  life. 

The  appeal  of  the  demagogue,  of  the  socialist, 
of  the  economist,  of  the  utopian  philosopher  is 
based  upon  a  denunciation  of  private  property. 
To  be  sure  no  two  of  these  men  agree  in  their 
arguments,  their  conclusions,  or  their  remedies, 
but  all  agree  in  the  assertion  that  there  is 
something  wrong  with  the  institution  of  private 
ownership. 

Where  so  many  different  thinkers  are  of  one 
mind  regarding  a  given  institution  it  is  only 
fair  to  concede  there  may  be  some  foundation 
for  their  con\dction,  and  if  there  is  anything 


\y- 


26  Property 

wrong   with    private    ownership    that    wrong 
should  be  discovered  and  remedied. 

There  is,  however,  this  alternative,  the  insti- 
tution of  private  property  may  not  he  tJior- 
oughly  understood;  it  may  be  charged  with 
faults  that  do  not  exist,  with  evils  for  which  it 
is  not  responsible. 

♦    ♦    ♦ 

The  prejudice  against  private  property  rests 
upon  the  assumption  that  one  man  has  more 
than  he  ought  to  have,  that  in  some  way  he 
owns  and  makes  use  of  the  fruits  of  the  labors 
of  others,  for  his  own  benefit  or  pleasure. 

It  is  easy  to  stir  the  resentment  of  men  who 
have  nothing  against  men  who  have,  by  telling 
the  former  they  have  been  robbed. 

It  is  easy  to  sow  hatred  in  a  community  by 
telling  those  of  small  means  they  would  have 
more  if  the  wealth  of  the  few  were  fairly 
distributed. 

Those  have  been  the  stock  arguments  of 
the  demagogue  throughout  the  ages,  and  it  goes 
without  saying,  if  the  arguments  were  sound, 
private  property  would  have  disappeared  long 
ago  —  or  rather  it  never  would  have  come  into 


Introduction  27 


existence  as  a  normal  factor  in  social  evolution. 
One  might  just  as  well  argue  against  the 
institution  of  government,  of  organized  society. 
In  spite  of  the  strongest  theoretical  objections 
government  and  organized  society  are  the  best 
devices  of  the  ages  to  meet  and  cope  with 
human  imperfections  and  dependencies. 
♦    ♦    ♦ 

Taking  private  property  as  it  is  established 
and  protected  in  all  civilized  communities,  and 
especially  in  the  United  States,  the  object  of 
this  little  book  is  to  try  and  find  out  what  it 
really  is,  and  ivhat  is  ivrong  ivith  it. 


II 

THE  AVERAGE  FORTUNE 

Mr.  John  D.  Rockefeller  is  said  to  have  a 
fortune  of  a  billion  dollars.  That  is  probably 
an  exaggeration,  but  whether  he  has  a  billion 
or  half  a  billion  answers  as  well  for  the  pur- 
poses of  the  argument. 

According  to  the  Census  Bureau  the  average 
wealth  of  each  man,  woman,  and  child  in  the 
United  States  in  1910  was  $1,300. 

Mr.  Rockefeller $1,000,000,000 

Average  person 1,300 

Such  statistical  comparisons  are  easily  and 
often  made  for  the  express  purpose  of  arousing 
discontent  and  resentment,  but  —  as  will  be 
found  on  analysis  —  the  figures  are  quite  mis- 
leading. 


•;♦     ♦;♦     ♦;♦ 


A  distinguished  political  leader  is  quoted  as 
having  said,  ''A  man  may  fairly  earn  a  million 
dollars." 

The  ideal  millionaire $1,000,000 

Average  person  1,300 

28 


The  Average  Fortune  29 

What  is  the  difference  between  Mr.  Kocke- 
feller  and  the  ideal  millionaire"? 
Simply  a  difference  in  degree. 

♦  ♦    ♦ 

The  political  leader  referred  to  is  said  to 
have  accumulated  a  fortune  of  over  one  hun- 
dred thousand  dollars. 

Leader $100,000 

Average  person  1,300 

♦  ♦    ♦ 

The  disparity  is  still  enormous. 
To  recapitulate: 

Mr.  Kockefeller  $1,000,000,000 

Ideal  millionaire 1,000,000 

Political  leader 100,000 

Average  person 1,300 

It  may  be  said  once  for  all  that  names  are 
used  in  this  book  solely  for  the  purpose  of  mak- 
ing the  argument  more  vivid  and  with  no 
thought  of  reflecting  upon  any  man. 

The  point  of  importance  here  is  the  simple 
statistical  proposition  that  to  the  extent  any 
individual  in  the  country  has  a  fortune  of  more 


30  Property 

than  $1,300,  to  that  extent  must  others  have 
less  —  hence  the  seeming  extremes  of  wealth 
and  poverty. 

The  word  "seeming''  is  used  advisedly  for  if 
the  extremes  of  wealth  and  poverty  were 
actually  such  as  those  indicated  on  the  face  of 
the  statistics  this  country  would  be  in  the  midst 
of  a  social  upheaval  such  as  the  world  has 
never  known. 

Or,  to  state  the  matter  differently,  it  is  incon- 
ceivable that  a  community  of  intelligent,  self- 
governing  people  should  tolerate  social  and 
economic  conditions  that  permit  one  man  to 
accumulate  and  absolutely  control  a  million  or 
a  thousand  times  as  much  as  another  who  is 
equally  industrious  and  equally  honest,  but  who 
may  lack  in  executive  ability. 

Granting  that  executive  ability,  rare  genius 
for  invention  or  organization,  is  entitled  to  its 
reward,  that  it  pays  the  community  to  encour- 
age the  exercise  of  such  ability  for  the  sake  of 
the  good  reaped  by  the  entire  community,  the 
proposition  that  such  reward  should  be  carried 
to  the  extent  it  seemingly  is  on  the  face  of  the 
statistics  violates  one's  sense  of  justice. 


Tlie  Average  Fortune  31 

If  the  apparent  extremes  of  great  wealth  and 
abject  poverty  sliocli  every  man's  sense  of 
ivhat  is  fair,  why  has  the  community  tolerated 
the  development  of  those  seeming  extremes'? 

And  why  does  not  the  community  remedy 
conditions  which  on  their  face  seem  so  out- 
rageously inequitable? 

There  are  two  possible  answers  to  those 
questions : 

1.  The  inequalities  are  as  real  as  the  figures 
indicate,  but  the  community  is  too  apathetic 
and  slothful  to  remedy  the  wrong. 

2.  Inequalities  exist,  but  by  no  means  to  the 
extent  indicated  on  the  face  of  the  figures ;  the 
community  is  restless  and  eager  for  social  and 
economic  reform,  but  is  not  revolutionary  and 
anarchistic  in  its  demands  because  it  feels 
without  fully  comprehending  that  somehow  the 
figures  are  misleading  and  it  sees  that  the 
actual  inequalities  between  the  rich  and  the 
poor  are  not  so  great  as  indicated. 

♦    ♦    ♦> 

Of  the  two  hypotheses  the  first  may  be  dis- 
missed at  once  as  not  in  keeping  with  the 
intelligence    of    this    or    any    other    civilized 


32  Property 

people.  Inequalities  in  the  distribution  of 
wealth  anything  like  those  indicated  on  the 
face  of  the  statistics  would  be  remedied  by 
revolution. 

The  very  fact  that  nations  pursue  the  fairly 
even  tenor  of  their  ways  century  after  century 
is  proof  positive  to  the  social  philosopher  that 
while  things  may  be  far  from  right  they  are  not 
j  so  wrong  as  the  radical  socialist,  communist,  or 
anarchist,  would  have  us  believe. 

Therefore  it  must  he  that  the  inequalities 
complained  of  are  more  apparent  than  real, 
and  to  the  extent  they  ought  not  to  exist  the 
community  is  slowly  but  surely  remedying 
them. 

This  last  hypothesis  is  the  only  one  that  is 
consistent  with  our  respect  for  the  intelligence 
of  mankind  and  with  any  plausible  theory  of 
the  gradual  evolution  of  all  things  social. 

The  very  fact  that  social  unrest  in  most  coun- 
tries, conspicuously  in  the  United  States,  falls 
short  of  revolution  is  proof  that  the  inequali- 
ties fall  short  of  revolutionary  magnitude.  Per 
contra  at  the  present  moment  the  unrest  in 
other  countries  since  the  World  War,  notably 


The  Average  Fortune 


in  Russia,  has  resulted  in  revolutions  wherein 
the  attempt  is  made  to  correct  the  inequalities 
of  both  wealth  and  power. 

If  the  inequalities  in  the  distribution  of 
wealth  were  actually  as  great  as  indicated  on 
the  face  of  the  figures  quoted  then  Bolshevism 
not  only  would  be,  but  should  be  rampant  in  the 
United  States. 

But  if  the  conclusions  regarding  the  real  as 
distinguished  from  the  apparent,  or  seeming, 
control  and  distribution  of  wealth  are  sound 
then  it  is  certain  that  Bolshevism  and  the  entire 
revolutionary  propaganda  —  in  so  far  as  it 
attempts  a  redistribution  of  property — will 
subside  after  turning  the  limelight  on  many 
real  evils,  and  after  working  many  real  reforms. 

The  man  of  philosophic  mind  watches  with 
unprejudiced  eye  the  spread  of  Bolshevism — 
i.  e.,  radicalism  —  knowing  that  its  vitality  is 
measured  by  the  truth  it  contains,  and  when 
that  truth  is  exhausted  —  i.  e.  applied,  demon- 
strated—  the  revolution,  the  movement,  will 
necessarily  come  to  an  end. 

The  difference  between  the  Bolshevik  and 
the  Menshevik  —  the  radical  and  the  moderate 


'y 


84  Property 

—  lies  in  the  extent  to  which  each  would  go  in 
overturning  existing  institutions. 

The  Bolshevik  sees  little  good  in  laws  and 
institutions  as  they  are  and  would  overturn 
nearly  everything.  The  Menshevik  sees  more 
good  and  would  overturn  less.  It  is  idle  to 
attempt  to  meet  the  arg-uments  of  either  by 
denunciation.  The  only  effective  way  is  to 
listen  dispassionately  and  analyze  coolly  but 
searchingly. 

^        4j»        <3» 

So  far  as  inequalities  in  the  distribution  of 
wealth  are  concerned  the  Bolshevik  —  the  radi- 
cal, the  revolutionist  —  would  seem  to  have  it 
all  his  own  way  on  the  face  of  the  statistics. 

A  billion,  or  a  million,  or  even  a  hundred 
thousand  to  the  average  of  thirteen  hundred  is 
not  a  comfortable  comparison;  while  a  billion 
or  a  million  to  nothing  is  a  direct  incentive  to 
revolution. 

♦    *    * 

Do  these  figures  accurately  reflect  the  true 
conditions? 

That  is  another  of  the  questions  we  are  going 
to  try  to  answer. 


Ill 

AN  ECONOMIC  FICTION 

Let  us  view  the  distribution  of  wealth  from 
another  angle. 

Statistically  and  legally  one  man  is  a  mil- 
lionaire while  another  may  have  little  or 
nothing. 

The  inequality  between  a  million  and  one 
hundred  or  nothing  is  enormous,  so  enormous 
that  only  a  mind  accustomed  to  large  figures 
can  grasp  it. 

♦     4>     ♦ 

While  the  statistical  inequality  between  a 
million  and  a  few  hundred  is  enormous,  is  it 
true  that  the  inequality  in  real  life  between  the 
man  who  ' '  o^,\ais  ' '  a  million  and  the  man  who 
has  but  a  hundred  or  even  nothing  is  as  enor- 
mous as  the  figures  indicate?  We  have  already 
committed  ourselves  to  the  proposition  that  if 
it  were  there  would  be  instant  revolution;  which 
is  equivalent  to  saying  that  social  conditions 
would  not  tolerate  the  development  of  such 
monstrous  conditions. 

35 


36  Property 

In  a  profound  sense  the  '^  millionaire  "  is  an 
economic  fiction;  one  of  the  illusions  incidental 
to  economic  progress.  He  exists  in  theory 
rather  than  in  fact ;  he  is  a  legal  entity,  rather 
than  a  living  and  breathing  mass  of  gold,  or 
wheat,  or  actual  wealth  of  any  kind. 
♦    *    * 

Take  the  present  instant,  the  particular 
moment  you  —  the  reader  —  are  reading  this 
paragraph. 

Pause  and  think. 

All  the  people  in  the  United  States  are  doing 
something,  most  of  them  working  hard. 

Imagine  yourself  seated  on  a  cloud  taking  a 
bird's-eye  view  of  this  country  of  ours. 

Would  it  not  resemble  an  ant-hill  in  activity? 
Would  it  not  be  true  that  the  idlers,  the 
wasters,  the  fools  and  criminals,  who  loom  so 
large  and  make  such  an  impression  when  close 
to  us,  would  be  so  few  they  would  be  lost  in  the 
mass  of  workers'? 

Look  more  closely  and  try  to  distinguish,  if 
you  can,  the  millionaire  from  the  thousandaire. 

You  do  see  that  some  dress  better  and  live 
better  than  others,  but  these  differences  are 


An  Economic  Fiction  .IT 

measured  not  by  millions  but  by  a  few  hun- 
dreds annually. 

The  best  buildings  you  find  are  public  build- 
ings, and  some  of  those  who  have  thousands 
per  year  are  public  servants ;  nearly  all  of  the 
gorgeous  uniforms,  and  many  of  the  most 
extravagant  entertainments,  receptions,  balls, 
parades,  celebrations,  etc.,  etc.,  are  public  func- 
tions, so  that  it  is  apparent  the  country — i.  e., 
the  conmaunity — not  only  countenances  but 
estahlislies  great  inequalities  in  rank,  power, 
office,  salaries,  comforts,  luxuries,  appearances, 
pleasures. 

If  you  are  of  a  reflective  turn  of  mind  you 
may  ask  yourself  whether  it  may  not  be  true 
that  in  these  respects  individuals  simply  ape 
the  examples  of  states. 

♦    ♦    ♦ 

Surveying  from  your  seat  on  the  cloud  the 
hiiman  ants,  who  are,  as  a  body,  working  so 
hard  to  accumulate  wealth  which  each  genera- 
tion must  leave  behind,  you  notice  all  the 
economic  inequalities  in  distribution  and  enjoy- 
ments above  mentioned,  and  on  the  human  side 
you  observe  physical,  moral,  intellectual  differ- 

58584 


38  Propertij 

ences  which  make  certain  economic  inequalities 
inevitable.  And  the  closer  you  look  the  more 
surprising  it  strikes  you  that  individuals  who 
differ  so,  one  from  another,  in  physical,  moral 
and  intellectual  strength  can  get  along  so  well 
together  in  one  community. 

4»    ♦    * 

Now  turn  from  the  living  units  to  the  results 
of  their  labors,  to  the  total  accumulated  wealth 
of  the  connnunity  from  seed  in  the  ground  to 
finest  finished  products;  from  a  path  in  the 
forest  to  an  elaborately  developed  railway  sys- 
tem ;  from  a  log  cabin  to  the  White  House. 

Your  first  and  absolutely  correct  impression 
is  that  all  this  wealth  belongs  to  the  community 
— to  the  human  ant-hill.  You  see  that  indi- 
viduals are  born  and  die,  generations  come  and 
go,  but  the  economic  progress  and  accumula- 
tions of  the  community  go  on  without  inter- 
ruption; it  is  all  an  essentially  community 
proposition,  differing  only  in  degree  and  not  in 
kind  from  the  accumulations  of  the  ant-hill  and 
the  beehive;  a  more  complex  and  elaborate 
development  of  the  tribal  stage  of  manldnd. 


An  Economic  Fiction  39 

As  a  philosopher — particularly  if  a  logical 
evolutionist  —  you  conclude  at  once  that  — 
whatever  the  inequalities  between  individuals, 
the  economic  system  followed  has  been  well 
adapted  to  attain  the  results  achieved.  Given 
any  material  changes  in  rights  and  incentives 
it  goes  without  sajdng  the  results  would  be 
materially  different — whether  better  or  worse 
no  man  can  say,  though  the  relentless  logic  of 
evolution  requires  you  to  argue  that  the  results 
achieved  are  the  best  possible  with  an  imper- 
fect human  factor ;  as  the  human  factor  gains 
in  physical,  moral  and  intellectual  strength, 
material  results  will  vary  accordingly.  If  the 
intelligence  of  some  of  the  ants  were  doubled 
the  proportions  of  the  hill  would  be  changed. 
♦    ♦    ♦ 

On  closer  study  you  find  that  individual  mem- 
bers and  groups  of  the  community  assert  claims 
to  particular  portions  of  the  community  wealth. 

First  of  all  the  conmaunity  itself  is  broken  up 
into  many  divisions  and  subdivisions,  political, 
religious,  educational,  industrial  (such  as  pub- 
lic enterprises  like  gas,  waterworks,  irrigation 
schemes,  harbors,  etc.)  and  that  each  of  these 


40  Propertif 

divisions  asserts  a  claim  to  its  special  portion 
of  the  total  wealth. 

This  assertion  of  claims  by  the  community 
and  by  its  various  subdivisions,  political  and 
industrial,  does  not  alter  the  fact  that  every 
building  is  used  by  and  every  public  enterprise 
run  by  individuals. 

4>      ♦      ♦ 

By  searching  the  records  you  ascertain  the 
legal  fact  that  the  White  House  is  ''  owned'* 
by  the  nation,  instead  of  by  its  occupant,  but 
this  legal  title  does  not  alter  the  social  fact  it  is 
the  home  and  office  of  an  individual,  the  Presi- 
dent, just  as  a  house  on  Fifth  Avenue  may  be 
the  home  and  office  of  a  well-kno^vn  physician. 
The  legal  title  to  the  house  on  Fifth  Avenue 
may  be  in  the  physician,  or  in  his  father,  or  in 
a  stranger,  or  a  trust  company,  or  in  the  City 
of  New  York ;  it  may  change  any  moment  with- 
out the  physician  knowing  or  caring,  the 
economic  fact  remains  that  the  house  is  a  part 
of  the  sum  total  of  community  wealth  and  it  is 
occupied  by  a  certain  individual  unit  as  a  con- 
venient place  to  best  serve  the  community. 


An  Economic  Fiction  41 

After  ascertaining  the  curious  —  from  your 
bird's-eye  point  of  view  —  fact  that  the  com- 
munity as  a  whole,  and  many  divisions  of  the 
community,  claim  legal  title  to  portions  of  the 
community  wealth,  even  to  hundreds  and  hun- 
dreds of  millions  of  gold  stored  in  public 
vaults,  you  probe  deeper  and  find : 

That,  follomng  the  example  of  the  com- 
munity, individuals  and  groups  of  individuals 
—  from  partnerships  of  two  up  to  corporations 
with  thousands  of  security  holders  —  claim 
legal  title  to  particular  portions  of  the  total 
wealth. 

In  short  you  find  that : 

1.  The  all-important  and  fundamental  facts 
are,  the  production,  use,  and  control  of  all 
ivealth  are  by  individuals  ivorhing  in  harmony. 

2.  But,  there  are  of  record  certain  documents 
which  give  (a)  the  community,  (b)  political, 
religious,  educational  subdivisions  of  the  com- 
munity, (c)  public  corporations  and  enter- 
prises, (d)  semi-public  corporations,  (e)  cor- 
porations, (f)  associations  of  all  kinds,  (g) 
partnerships,  (h)  individuals,  legal  title  to  such 


42  Property 

portions  of  the  total  wealth  as  they  produce  or 
use,  or  **  own  "  as  the  phrase  goes. 


♦!♦        ♦!♦        ♦» 


This  is  a  very  curious  and  highly  artificial 
condition  for  it  is  at  once  apparent  that  if 
every  legal  record  were  burned  and  no  attempt 
made  to  ascertain  and  restore  the  legal  titles 
not  a  penny  of  actual  wealth  would  be  affected, 
and  the  only  occupations  of  individuals  that 
would  be  affected  would  be  those  which  had  to 
do  with  the  preservation  of  these  legal  con- 
ditions and  records.  Aside  from  people  engaged 
in  these  occupations  the  work  of  every  indi- 
vidual in  the  community  would  remain  pre- 
cisely the  same  for  a  time. 

You  naturally  ask,  * '  Why  not,  then,  wipe  out 
this  cumbersome  legal  machinery,  and  permit 
the  community  to  go  along  simpler  economic 
lines?" 

The  answer  is  twofold: 

1.  From  the  evolutionist's  standpoint,  it  is 

/  p^ain  that  cumbersome  scheme  of  legal  title,  of 

**  o^\^lership  "  as  distinguished  from  actual  use 

and  control,  would  not  have  developed  unless 

there  was  good  reason  for  it.    All  civilizations 


An  Economic  Fiction  43 


seem  to  have  progressed  in  proportion  to  the 
extent  they  recognized  and  protected  these 
paper  property  rights ;  the  more  elaborate  the 
scheme  of  paper  property  rights  the  higher  the 
civilization,  and  vice  versa. 

History  proves  the  truth  of  this;  it  also 
shows  that  the  recognition  of  rights  —  par- 
ticularly political — may  be  carried  so  far  the 
system  totters  and  falls  either  by  its  own 
weight  or  by  revolutions. 

2.  Aside  from  the  cold  materialistic  conclu- 
sions of  the  evolutionist,  it  is  apparent  —  the 
more  you  probe  the  matter — that  this  legal 
notion  of  ownership  is  the  most  powerful  incen- 
tive to  individual  effort  ever  devised. 

Possession  is  the  most  powerful  incentive 
known  to  the  brute  mind,  but  the  human  has 
made  a  great  advance  over  the  brute  in  that  it 
separates  the  idea  of  oivnership  from  the  hald 
fact  of  possession,  and  thereby  multiplies  in- 
definitely incentives  to  effort. 
♦    ♦    ♦ 

The  brute  can  possess  but  one  or  two  things 
at  a  time;  the  human  can  ''  own  " — have  legal 
title  —  to  many. 


44  Property 

True,  the  human  does  not  possess  —  occupy, 
or  physically  control — more  than  one  or  two, 
or  at  most  a  few,  but  because  the  laiv — i.  e.  the 
ingenious  device  of  the  community — says  he 
may  "  own  *^  more,  and  gives  him  the  right  to 
take  possession  (though  often  under  great 
difficulties  and  restrictions),  he  is  satisfied  and 
goes  on  working  feverishly  to  accumulate 
paper  titles  to  things  other  individuals  possess 
and  use. 

Were  it  not  for  this  invention  of  paper 
rights,  all  incentive  to  production  and  ac- 
1  cumulation  would  end  near  the  brute  level, 
namely  with  the  production  and  accumulation 
of  only  so  much  as  each  individual  could 
physically  hold  to  the  exclusion  of  others. 

With  the  recognition — the  invention  —  of 
paper  titles  the  incentive  to  produce  and  ac- 
cumulate is  extended  indefinitely. 

*•*     *•*      *2* 

A  most  ingenious  scheme  to  keep  men  at 

^  work.    It  is  a  direct  appeal  to  the  speculative 

instinct  which  is  so  powerful  in  —  and  peculiar 

to  —  mankind.    It  fosters  and  encourages  the 

spirit  of  accumulation,  permitting  men  to  think 


A71  Economic  Fiction  45 

they    accumulate    for    themselves    and    their 
families,  whereas  in  last  analysis  they  simply 
swell  the  total  accumulations  of  the  community 
— the  ant-hill. 
It  is  a  great  game. 

♦    ♦>    ♦> 

The  total  actual  wealth  of  the  community  is 
one  thing,  the  legal  or  paper  wealth  is  quite 
another. 

Take  a  farm,  for  instance ;  there  it  is  with  its 
improvements  and  buildings.  From  your  cloud 
loerch  you  see  every  foot  of  the  land,  you  see  a 
family  living  in  the  house  and  several  men 
working  in  the  fields;  it  is  all  quite  plain  —  as 
plain  as  an  ant  dragging  food  to  its  hill  —  these 
individuals  are  working  a  given  piece  of  land 
for  their  o"wn  living  and  profit  and  thereby  add- 
ing to  the  sum  total  of  the  wealth  of  the  com- 
munity. 

Adjoining  this  farm  is  another,  then  another 
and  another ;  then  come  forests,  and  mines,  and 
factories,  all  worked  by  individuals  who  die 
and  are  succeeded  by  other  individuals,  and 
meanwhile  the  improvements  go  on,  the  sum 
total   of  the   community  wealth    steadily   in- 


46  Property 

creases  until  farms  and  mines  and  factories 
are  exhausted  then  the  individuals  cannot  pro- 
duce so  much  during  their  lifetimes  and  the 
total  wealth  decreases. 

All  this  is  quite  plain,  but  when  you  inquire 
closely  why  the  individuals  work  so  hard,  why 
they  try  to  produce  so  much  more  than  each 
one  consumes  you  hear  of  this  scheme  of 
^'  oivnership  "  this  legal  device  which  permits 
a  man  to  say  he  ' '  owns  ' '  what  others  actually 
possess  and  use. 

The  farm  you  first  looked  at  is  not  **  owned  " 
by  the  family  or  the  men  on  it,  it  is  ^*  owned  " 
by  a  man  two  thousand  miles  away,  but  while 
he — A — has  the  legal  title  paper;  another 
man,  B,  has  a  mortgage  paper  of  ten  thousand 
dollars  on  the  land  and  buildings;  C  has  a 
chattel  mortgage  paper  on  the  macnines  used ; 
D  has  a  contract  for  purchase  paper;  while  E, 
the  man  with  the  family  in  the  farmhouse,  has 
a  lease  paper. 

These  are  some  of  the  ramifications  of  paper 
ownership  —  all  legal  creations  as  distinguished 
from  economic. 

Add  together  the  various  values  placed  upon 


An  Economic  Fiction  4*7 

these  various  interests  and  the  sum  total  would 
far  exceed  the  actual  value  of  the  farm  and  its 
improvements. 

Theoretically  the  two  totals  should  coincide, 
but  in  practice  they  do  not,  as  is  amply  demon- 
strated in  almost  every  foreclosure  where  all 
the  legal  interests  are  merged  by  actual  sale  of 
property;  there  is  usually  a  radical  scaling 
down  of  paper  values,  and  individuals  who 
thought  they  were  rich  find  themselves  poor. 

♦  ♦    ♦ 

Look  at  this  great  railroad  running  from 
New  York  to  Chicago  with  its  many  tracks, 
stations,  warehouses,  cars,  locomotives,  etc.  It 
is  all  in  the  actual  possession  of  the  thousands 
of  employees,  from  president  to  flagman,  who 
operate  it. 

Not  one  of  those  who  actually  control  and 
operate  the  road  could  tell  who  the  ''owners  " 
are,  nor  do  they  care  so  long  as  the  owners  do 
not  interfere  with  efficient  operation. 

♦  ♦    ♦ 

On  inquiry  you  find  that  the  road  is  legally 
''  owned ''  by  thousands  of  stockholders  and, 
ahead  of  the  stockholders,  thousands  of  bond- 


48  Property 

holders,  many  of  whom  have  never  seen  any 
part  of  the  line,  and  many  of  whom  are  women, 
children,  banks,  insurance  companies,  and  other 
corporations,  all  of  whom  have  pieces  of  paper 
which  are  their  evidences  of  title. 

All  these  pieces  of  paper  could  be  burned 
without  destroying  a  penny  of  actual  wealth 
and  without  affecting  in  the  slightest  degree 
the  daily  duties  of  a  single  man  or  boy  actually 
engaged  in  working  the  road — excepting,  of 
course,  those  whose  duties  have  to  do  with  the 
issuing,  signing,  transferring  of  the  pieces  of 
paper — they  would  suddenly  find  themselves 
with  nothing  to  do — but  every  other  employee 
would  go  about  his  work  just  the  same. 

Just  the  same? 

Not  quite,  for  sooner  or  later  they  would  all 
know  that  private  ownership  of  the  property 
had  been  abolished,  that  no  more  pieces  of 
paper  would  be  issued,  and  the  entire  service 
would  take  on  the  atmosphere  of  state  service, 
an  atmosphere  of  listlessness  and  indifference, 
the  atmosphere  of  routine,  of  work  with  no 
expectations  save  that  of  slow  advancement  by 
seniority. 


An  Economic  Fiction  40 

When  you  add  together  all  the  issues  of 
stocks,  bonds,  notes,  and  other  forms  of  in- 
debtedness, evidenced  by  outstanding  pieces  of 
paper,  the  total  is  so  enormous  the  question  at 
once  arises, ''Is  it  possible  the  railroad  is  worth 
that  much?" 

Probably  not,  or  if  it  is,  it  is  due  to  the 
increased  value  of  its  franchise,  right  of  way, 
terminals  —  land  values  —  due  to  increase  of 
population  along  the  line  rather  than  to  actual 
labor  and  money  put  into  the  property,  and 
besides  much  depends  upon  how  "value"  is 
defined,  and  by  what  rule  "  valuing"  is  done. 

But  whether  the  road  is  worth  less  or  more 
than  all  its  outstanding  pieces  of  paper,  the 
fact  is  obvious  that  there  before  your  eyes  is 
the  physical  property,  the  lines  of  rail,  the  sta- 
tions, warehouses,  cars,  locomotives,  etc.,  and 
there  are  the  workers  in  actual  possession. 

In  the  hands  of  others,  stockholders,  bond- 
holders, banks,  etc.,  are  pieces  of  paper  which 
are  bought  and  sold  as  valuable.  One  small 
stock  certificate  for  two  hundred  shares  may 
sell  for  more  than  a  locomotive. 

And  because  these  pieces  of  paper  do  sell  at 


50  Propcrtij 

high  prices  there  is  a  constant  temptation  to 
print  more  and  more  and  more  until  confidence 
is  shaken  and  the  great  structure  of  credit  and 
inflation  collapses.  A  drastic  period  of  reor- 
ganization and  readjustment  follows.  For- 
tunes and  savings  invested  in  the  pieces  of 
paper  are  lost.  People  are  impoverished.  But 
the  road  goes  on  just  the  same.  Not  a  wheel 
ceases  to  turn,  not  an  employee  is  laid  off.  It 
often  happens  that  during  these  periods  of 
destruction  of  paper  values  the  road  is  reha- 
bilitated and  operated  better  than  ever  before. 
While  paper  values  are  tumbling,  actual  values, 
represented  by  labor  spent  upon  the  property, 
are  increasing. 

♦    ♦    ♦ 

We  are  so  accustomed  to  paper  evidences  of 
wealth  that  we  habitually  confound  them  with 
actual  wealth. 

To  the  farmer  the  wheat  stored  in  an  ele- 
vator means  more  than  the  ivareJiouse  receipt 
issued  against  it,  but  to  the  banker  the  piece  of 
paper,  the  receipt,  means  more  than  the  wheat. 
The  banker  could  not  use  a  bushel  of  the  wheat, 


An  Economic  Fiction  51 

but  lie  will  loan  thousands  of  dollars  on  the 
piece  of  paper. 

♦  ♦     ♦> 

So  it  is  with  notes,  stocks,  bonds,  mortgages, 
the  pieces  of  paper  take  the  place  of  the  real 
properties  in  all  commercial  and  financial  trans- 
actions, and  the  world  comes  to  look  upon  them 
as  if  they  were  actual  wealth. 

♦  ♦    ♦ 

THEY  ARE  EEAL  IN  THEIR  WAY. 

♦  ♦    ♦ 

That  is  the  most  important  economic  truth  to 
get  clearly  in  mind  at  the  very  outset  of  any  in- 
vestigation of  real  or  apparent  inequalities  in 
the  distribution  of  wealth. 


»>        ♦!♦ 


There  are  enormous  inequalities  in  the  dis- 
tribution of  paper  wealth. 

The  inequalities  in  the  distribution  of  actual 
wealth  are  slight  in  comparison. 

We  are  getting  close  to  the  heart  of  the  prob- 
lem of  the  distribution  of  wealth. 

The  distribution  of  actual  wealth  is  one 
thing. 


52  Property 

The  distribution  of  paper  wealth  is  quite  a 
different  thing. 

There  are  thousands  and  thousands  of  paper 
millionaires.  There  may  be  even  a  paper  bil- 
lionaire. 

There  is  not  and  never  has  been  an  actual 
millionaire  —  except 

A.  In  land 

B.  In  luxuries 

Both  of  which  exceptions  are  fully  consid- 
ered in  chapters  ix  and  x. 

It  is  a  physical  possibility  for  a  man  to 
''own"  and  have  in  his  exclusive  possession 
paper  representing  millions — hence  he  is  a 
millionaire  on  paper. 

It  is  —  with  the  exception  of  land  and  lux- 
uries—  a  physical  impossibility  for  a  man  to 
"own"  and  have  in  his  exclusive  possession 
more  than  a  few  hundreds  of  thousands  in 
actual  wealth — hence  he  is  not  a  millionaire 
when  it  comes  to  actual  use  and  control  of 
wealth  to  the  exclusion  of  others. 
♦    ♦    ♦ 

The  cry  of  the  agitator,  the  argument  of  the 
socialist  and  communist  are  directed  against 


An  Economic  Fiction  53 

the  paper  millionaire. 

Little  or  no  attention  is  paid  to  the  actual  — 
1.  e.,  the  land  or  luxury  millionaire. 

It  seems  to  be  assumed  that  if  a  man  is  a 
paper  millionaire  he  will  also  be  a  land  or 
luxury  (or  both)  millionaire. 

It  by  no  means  follows. 

If  we  exclude  land  millionaires  who  are  in 
an  economic  class  by  themselves  the  luxury 
millionaires  are  comparatively  few  in  numbers, 
so  few  they  are  very  conspicuous  in  the  cities 
where  they  live. 

Most  paper  millionaires  live  in  modest  homes 
and  are  kno^\Ti  only  as  exceptionally  hard 
workers.  They  go  on  all  their  lives  accumulat- 
ing these  pieces  of  paper  or  enlarging  their  en- 
terprises, spending  little  on  themselves  and 
their  homes. 

♦    *    ♦ 

The  trouble  is  not  in  the  distribution  of 
paper  wealth  but  in  the  distribution  of  actual. 

True,  inequalities  in  the  distribution  of  paper 
wealth  may  and  often  do  lead  to  inequalities  in 
the  distribution  of  actual,  since  paper  wealth 
is  power  over  actual,  but  this  power  is  not  exer- 


54<  Property 

cised  nearly  so  often  as  the  agitator  and  the 
socialist  think. 

It  is  exercised  so  seldom  that  the  cause  of 
social,  industrial,  and  commercial  ills  must  be 
sought  elsewhere. 

And  first  of  all  in  human  nature  itself. 

That  is  the  first  great  source  of  all  our 
troubles — the  weaknesses  and  vices  of  man- 
kind. 

Our  institutions  are  no  better  than  we  are. 

That  is  not  quite  true,  for  happily  in  a  sense 
they  are.  Men  preach  better  than  they  prac- 
tice. Bad  as  they  seem  to  be  at  times  public 
—  publicly  professed  —  morals  are  always  bet- 
ter than  private.  We  profess  and  upJiold 
higher  standards  than  we  attain.  In  politics 
and  business  we  condemn  practices  we  secretly 
follow. 

Every  community  has  hundreds  of  laws  it 
cannot  enforce,  laws  against  drunkenness  and 
prostitution,  laws  against  unfair  business 
methods,  against  cheating,  deceiving,  and 
fraud ;  pure  food  laws,  laws  for  safety,  hygiene, 
protection  of  women  and  children,  and  so  on 
endlessly. 


An  Economic  Fiction  55 

These  laws  are  never  enforced  as  fully  as 
they  should  be  —  why  ? 

Because  the  community  cannot  triumph  over 
the  ingenuity  and  inherent  waywardness  of  its 
individual  members. 

'^     'Sf     ^ 

Every  evil  known  to  society  has  its  origin  in 
and  derives  its  strength  from  the  individual. 

When  employers  and  employees  are  in  violent 
conflict,  each  side  asserting  the  rigJitness  of  its 
cause  and  conduct,  the  thinking  man  knows 
that  each  side  is  made  up  of  men  equally 
greedy,  equally  unscrupulous,  equally  quick  to 
fight,  kill,  burn  —  in  short  of  men  of  the  same 
day  and  generation,  just  average  human 
heings;  no  white  and  spotless  angels  among 
them. 

♦    ♦    ♦ 

Conceding  that  the  great  source  of  all  our 
troubles,  ethic  as  well  as  economic,  is  our  own 
imperfect  human  nature,  still  it  does  not  follow 
that  we  should  fold  our  hands  and  sit  supine. 
On  the  contrary  w^e  have  two  tasks : 
First,  to  hammer  away  with  all  our  strength 
at  the  weaknesses  of  our  hum.an  nature,  and 


56  Propertij 

make  ourselves  better,  so  we  may  live  up  to 
our  standards  —  that  is  the  ethic,  and,  if  you 
please,  the  physiologic  task. 

Second,  to  investigate  profoundly  and  impar- 
tially social  and  economic  conditions  with  a 
2.  view  to  understanding  and  remedying  them  in 
so  far  as  imperfect  human  beings  can  remedy 
inequalities  that  are  so  largely  due  to  inherent 
human  imperfections — that  is  the  economic 
and  sociologic  task. 

♦>    ♦    ♦ 

Inasmuch  as  these  two  fundamentally  dis- 
tinct conditions  are  at  the  base  of  all  our 
troubles  it  goes  without  saying  that  the  re- 
former who  promises  his  hearers  perfection  as 
the  result  of  the  adoption  of  his  economic  or 
social  theories  is  promising  something  that 
cannot  he. 

The  socialist  who  draws  a  picture  of  social 
contentment  and  happiness  providing  his  sug- 
gestion of  state  ownership  of  capital, be  adopted 
ignores  completely  the  human  factor,  ignores 
the  physical,  mental,  moral,  differences  that 
exist  between  man  and  man,  nation  and  nation, 
race  and  race. 


An  Econoynic  Fiction  57 


His  argument  assumes  that  the  adoption  of 
an  economic  reform  would  instantaneously 
make  imperfect  men  perfect.  To  bring  the 
argument  down  to  earth,  it  assumes  that  the 
moment  the  government  takes  over  a  given 
railway  every  employee  instantly  becomes  an 
miselfish  altruistic  being  whose  sole  thought  is 
the  welfare  of  humanity. 

The  hard  cold  fact  is  that  labor  unions  in 
control  of  government  enterprises  are  more 
selfish,  more  militant,  more  arbitrary,  more 
aggressive  than  in  privately  conducted  enter- 
prises—  as  the  recent  experiment  of  govern- 
ment control  of  the  railroads  in  this  country 
has  convincingly  demonstrated. 
♦    ♦    ♦ 

We  have  reached  the  conclusion  that  while 
the  nominal  or  legal  wealth  of  an  individual 
may  be  very  large,, the  actual  wealth  controlled 
or  consumed  by  him  may  be  relatively  small. 

A  man  may  be  nominally  a  millionaire  or 
even  a  billionaire,  and  actually  control  and  con- 
sume less  wealth  than  a  railroad  president  who 
has  little  besides  his  salary. 

In  fact  the  railroad  president  may  actually 


// 


58  Property 

control  and  manage  'productively  the  wealth 
that  is  nominally  and  legally  the  property  of 
the  millionaire. 

Take  the  extreme  case  of  the  millionaire  who 
belongs  to  the  "idle  rich,"  who  does  nothing 
but  amuse  himself  in  ways  that  are  productive 
of  no  good  to  the  community. 

This  is  an  extreme  hypothesis  because  even 
the  most  worthless  and  dissolute  millionaire 
may  build  houses,  improve  estates,  build  yachts, 
buy  fine  homes  or  automobiles,  and  in  his  very 
extravagance  unintentionally  encourage  the 
production  of  useful  and  beautiful  things. 

But  take  the  extremest  of  extreme  cases — 
the  man  whose  very  existence  is  a  nuisance  to 
the  community  and  whose  death  would  be  a 
relief  to  family,  friends,  and  the  city  in  which 
he  lives.  The  moral  harm  he  does  by  his  mode 
of  life  may  be  great,  but  that  is  a  consideration 
by  itself  and  applies  to  the  poor  man  as  well 
as  the  rich. 

His  economic  cost  to  the  community  is  the 
money  he  wastes  on  himself  and  others. 

It  would  be  interesting  to  analyze  this  term 
**  waste,"  for  it  would  be  found  that  a  certain 


An  Economic  Fiction  59 

percentage  of  the  money  spent  in  the  most 
wasteful  manner  is  not  lost,  but  directly  or 
indirectly  benefits  others.  The  moral  evil  of 
the  expenditures  may  far  overshadow  the  inci- 
dental economic  benefit,  but  the  benefit  may  be 
there  just  the  same. 

To  state  the  proposition  more  baldly; 

A  rich  man  might  take  a  cargo  of  wheat  and 
sink  ship  and  cargo  in  the  middle  of  the 
ocean.  That  would  be  total  loss  to  him  and  the 
community — absolute  waste. 

If  instead  of  so  doing  he  spent  the  value  of 
the  ship  and  wheat  —  say  $200,000  in  the  wild- 
est sort  of  riotous  living,  the  moral  example 
would  be  so  bad  the  notoriety  and  shock  might 
result  in  good;  but  some  of  the  money  would 
percolate  back  into  productive  channels;  it 
would  not  be  all  lost  as  if  the  wheat  were  sunk 
in  the  ocean. 

The  worst  economic  effect  of  the  wasteful 
spending  would  be  to  divert  men  and  women 
for  the  time  being  from  useful  employments  to 
the  idle  or  vicious  employments  demanded  by 
the  spender. 

There  would  be,  however,  at  least  some  sup- 


60  Property 

port  and  stimulation  of  occupations,  trades,  and 
industries  of  economic  value  to  the  community. 
The  reckless  buying  of  high-priced  automobiles 
would  be  largely  waste,  but  at  the  same  time 
this  reckless  encouragement  of  automobile 
makers  to  exercise  all  their  ingenuity  to  turn 
out  more  perfect,  faster,  and  more  elaborate 
cars,  would  stimulate  the  production  of  better 
cheap  cars,  just  as  the  time  and  money  formerly 
wasted  in  this  country  in  horse  racing  was  not 
wholly  wasted  since  it  helped  perfect  the  breeds 
of  horses  for  all  purposes. 

The  yearly  account  of  the  worthless  rich  man 
with  the  community  would  stand  as  follows : 
To  the  sum  total  of  all  the  wealth 

consumed  and  spent  —  say $200,000 

By  so  much  of  that  amount  as 
directly  or  indirectly  advances  use- 
ful employments  —  say 25,000 


Annual  cost  to  the  community $175,000 

That  is  the  item  the  community  is  interested 

in. 

He  may  be   "worth"   ten   million   dollars. 

Suppose  he  inherited  that  amount.     His  in- 


An  Economic  Fiction  61 

\ 


come  at  only  five  per  cent  would  be  $500,000, 
three  hundred  thousand  dollars  of  which  he 
invests  in  more  stock  and  bonds,  because  he 
cannot  spend  more  than  two  hundred  thousand 
dollars. 

The  public  disapproves  his  way  of  living  and 
rightly  looks  upon  him  as  a  nuisance,  and  be- 
cause he  is  a  vicious  member  of  the  community 
and  spends  lavishly  he  brings  all  millionaires 
into  disrepute.  The  fault  of  the  individual  is 
attributed  to  his  wealth,  yet  he  is  not  touching 
a  penny  of  his  ten  million  dollars.  Every  dol- 
lar is  productively  engaged  in  the  hands  of 
others.  If  his  fortune  consists  of  railroad 
stocks  his  very  existence  may  be  unknov.Ti  to 
the  men  running  the  roads;  if  it  consists  of 
government  bonds  whether  he  lives  or  dies  is 
immaterial  to  the  government,  all  his  money  is 
devoted  to  public  uses  just  the  same  as  if  the 
government  confiscated  it  and  stopped  interest 
on  its  bonds. 

Not  only  is  the  principal  of  ten  million  dol- 
lars productively  engaged,  but  $300,000  of  the 
income  goes  back  into  productive  uses. 

Therefore  50  Jong  as  he  continues  to  squander 


62  Property 

only  $200,000  per  year,  twenty-five  thousand 
dollars  of  which  is  not  wasted,  his  economic 
cost  to  the  commnnity  is  $175,000  per  year;  his 
wealth  of  ten  million  dollars  is  a  legal  fiction. 
It  is  very  much  as  if  the  community  gave  him  a 
pension  of  $175,000  per  year  to  squander. 
♦    ♦    ♦ 

We  have  taken  an  extreme  case.  There  are 
many  men  and  women,  young  and  old,  with 
large  incomes  who  spend  viciously  and  fool- 
ishly large  percentages  of  their  incomes  ;  men 
and  women  who  are  veritable  nuisances  to 
themselves,  their  families,  their  cities  —  to 
civilization  itself. 

But  the  number  is  not  actually  so  large  as  is 
commonly  supposed;  and  with  those  the  per- 
centage of  income  absolutely  wasted  is  not  so 
great  as  coimnonly  reputed. 

It  is  said  that  one  swallow  does  not  make  a 
summer,  but  it  is  pretty  nearly  true  that  one 
fool  makes  a  winter. 

One  monl^ey  dinner,  one  dog  luncheon, 
heralded  by  the  press,  prejudices  the  entire 
country  not  only  against  a  large  class,  but 
against  a  city. 


An  Economic  Fiction  63 

The  rich  —  the  richer — man  is  everj^where, 
the  rich  farmer,  merchant,  mannfacturer, 
banker. 

And  the  overwhelming  majority  of  rich  men 
—  of  men  who  have  more  than  the  average — ■ 
whether  farmers  or  merchants,  and  w^hether 
worth  ten  thousand  or  ten  millions  continue  to 
ivorh  in  one  w^ay  or  another  for  the  good  of  the 
community.  If  they  ' '  retire  ' '  from  more 
active  work  it  is  to  take  up  something  else, 
some  hobb}^,  that  may  be  of  even  greater  benefit 
to  the  community. 


IV 

ONLY  FOR  LIFE 

''  We  brought  nothing  into  this  ivorld  and  it 
is  certain  we  can  carry  nothing  out." 

So  said  Saint  Paul  and  trul}''. 

The  rich  man  dies  like  the  poor  man,  of  all 
his  wealth  he  takes  not  a  penny  with  him. 

At  most  therefore  private  property  is  but  a 
life  estate. 

AVhat  a  man  does  not  actually  consume  dur- 
ing his  lifetime  he  must  leave  behind  for  others 
to  enjoy. 

One  moment  he  is  said  to  be  ' '  worth ' '  a 
million  dollars,  the  next  he  breathes  his  last 
and  is  "  worth  "  nothing. 

The  food  we  are  eating  may  be  said  to  be 
our  own  in  the  most  absolute  sense  inasmuch 
as  we  are  actually  consuming  and  absorbing  it. 

The  clothes  w^e  wear  may  be  said  to  be  our 
own,  but  in  not  quite  so  absolute  a  sense  since 
our  sudden  death  would  leave  them  behind  for 
others  to  use. 

Others  have  a  still  greater  reversionary  in- 
terest in  our  houses,  and  so  on. 

64 


0}tJu  for  Life  65 

The  rich  man  spends  a  million  dollars  on  a 
great  estate  in  the  country.  He  is  said  to 
'*  own  "  it,  and  so  he  does  in  a  legal  sense.  The 
law  —  which  is  simply  the  custom  of  society  as 
at  present  constituted  —  sa^^s  he  may  have 
exclusive  possession  of  the  estate^  during  his 
lifetime,  may  sell  it,  lease  it,  dispose  of  it  by 
will,  and  if  he  does  not  dispose  of  it  by  will  the 
law  names  the  heirs  to  whom  the  estate  shall  go 
on  the  "  owner's  "  death,  and  if  there  are  no 
heirs  then  the  law  says  the  estate  shall  go  to 
the  state,  to  the  community,  in  which  event  the 
legal  fiction  of  that  particular  private  property 
vanishes  in  thin  air. 

♦    ♦    ♦ 

In  tribes  it  is  the  custom,  and  in  civilized 
states  it  is  the  laiu,  that  on  a  man 's  death  title 
to  his  property  shall  pass  to  certain  persons, 
usually  members  of  his  family ;  if  he  leaves  no 
famil}^  or  relatives  the  tribe  or  the  state  may 
take  his  property,  and  the  tribe  or  the  state 


^  Always  subject  to  the  superior  rights  of  the  community 
such  as  the  right  of  eminent  domain,  control  for  purposes  of 
sanitation,  etc.,  which  need  not  here  be  enumerated  but  which 
very  materially  modify  that  absolute  control  which  is  popu- 
larly supposed  to  go  with  private  property. 


66  Property 

usually  takes  a  portion  as  a  matter  of  custom 
or  under  succession  and  inheritance  tax  laws. 

Furthermore  the  character  of  the  property 
makes  a  great  difference  in  its  disposition. 

Every  community  recognizes  the  distinction 
between  ownership  of  realty  and  personalty. 

The  land  a  man  owns  passes  under  certain 
special  provisions  of  the  law,  while  his  per- 
sonal property  passes  under  separate  and  more 
or  less  different  provisions. 

In  no  two  countries  and  in  no  two  states  of 
this  country  are  the  succession  laws  and  in- 
heritance taxes  precisely  the  same,  and  in 
every  country  and  every  state  these  laws  are 
undergoing  changes  at  the  will  of  the  com- 
munity. 

For  instance  the  laws  of  England  and  Scot- 
land regarding  the  descent  of  real  property  are 
very  different,  and  again  in  both  countries  the 
distribution  of  personal  property  is  governed 
by  entirely  different  regulations. 

In  England  as  regards  lands  the  Eules  of 
Inheritance  apply,  while  as  regards  personal 
property  the  Statute  of  Distribution  governs. 

Until  1890  this  last  named  statute  provided 


Only  for  Life  67 

that  where  a  man  died  without  a  will,  leaving  a 
widow  and  no  children  or  next  of  kin,  the 
widow  took  one-half  the  personal  estate  while 
the  other  half  went  to  the  Crovv^l. 

In  the  United  States  some  of  the  states  follow 
the  Roman  law,  some  the  Common  law,  while 
others  like  California,  Louisiana,  and  Texas 
follow  French  and  Spanish  law. 

To  add  to  the  confusion  it  is  generally  the 
rule  that  the  descent  of  real  property  is  gov- 
erned by  the  laws  of  the  country  or  state  where 
the  property  is  situated,  the  distribution  of 
personal  property  is  governed  by  the  laws  of 
the  country  or  state  wherein  the  owner  was 
domiciled — had  his  residence. 

So  that  a  man  by  buying  a  residence  across 
a  street,  if  that  street  happens  to  mark  the  line 
between  two  countries  or  states  may  without 
knowing  it  change  materially  the  rights  of  his 
widow  and  relatives  in  the  distribution  of  his 
personal  estate,  he  m-ay  even  limit  his  own 
power  to  dispose  of  that  estate  by  will. 
♦    ♦    ♦ 

The  manner  in  which  tribes  from  the  most 
primitive   states  through  to  the  most  highly 


68  Property 

civilized  have  treated  succession  to  property 
demonstrates  clearly  the  purely  human  and 
social  character  of  all  property  rights,  and  the 
community's  absolute  control  over  same. 

<^         ^         r?4 

Now  why  have  savage  tribes  by  custom  and 
civilized  states  by  laiv  given  certain  persons, 
family,  and  relatives,  the  right  to  succeed  to  — 
that  is  enter  into  possession  of  — either  all  or  a 
portion  of  the  dead  man's  property? 

♦    ♦    "> 

First  —  for  the  obvious  reason  that  when  a 
man  disappears,  or  is  incapacitated  by  illness, 
or  dies,  someone  must  take  possession  of  his 
property. 

If  no  parties  are  designated  by  custom  or 
law  then  there  will  be  a  scramble  and  the  death 
of  each  individual  would  be  awaited — perhaps 
accelerated  —  by  all  near  at  hand  in  order  that 
they  might  seize  his  possessions. 

These  conditions  have  actually  prevailed  in 
whole  or  in  part  with  the  result  that  even 
primitive  tribes  find  it  necessary  to  follow  cus- 
toms whereby  either  the  chief,  or  the  relatives 


Only  for  Life  69 


of  the  dead  man,  quietly  assume  possession  of 
his  property. 

♦:♦    ^    ♦:♦ 

A  custom  or  law  of  succession  is  necessary  to 
prevent  strife  and  ivaste. 

There  is  no  question  of  abstract  right  in- 
volved. 

A  son  has  no  more  right  to  succeed  to  his 
father's  property  than  a  daughter,  or  a  brother, 
or  a  cousin,  or  a  stranger.  His  right  is  estab- 
lished by  custom  or  law  and  may  be  curtailed 
or  abolished  by  custom  or  law. 

It  is  so  generally  the  custom  for  children  and 
near  relatives  to  inherit  that  most  people  labor 
under  the  impression  they  have  a  peculiar, 
almost  * '  sacred  ' '  right.  It  is  highly  important 
to  realize  that  no  such  abstract  right  exists.       •'' 


♦>     ♦:« 


The  foundation  of  the  right   of  succession 
and  inheritance  is  purely  practical. 

True,   the   heirs    or    successors   may   prove 
incompetent,  but  even  at  the  risk,  where  there 
is  no  will,  of  turning  the  property  of  the  dead 
man  over  to  incompetent  children  or  relativeSi  } 
experience  has  demonstrated  it  is  wiser  for  the 


70  Property 

community  to  liave  fixed  lav;s  of  succession 
than  it  would  be  for  the  conuuunit}^  to  attempt 
to  investigate  in  each  instance  the  competency 
of  the  heirs  and  distribute  the  estate  accordingly 
—  a  course  ideally  desirable  but  'practically 
impossible. 

♦  ♦    ♦ 

The  entire  question  of  inheritance  and  suc- 
cession is  therefore  a  purely  economic  ques- 
tion. 

The  sole  object  of  every  inheritance  or  suc- 
cession law  should  be  to  secure  to  the  com- 
munity the  highest  degree  of  efficiency  in  the 
management  of  the  property  abandoned  by  the 
man  who  has  disappeared,  died,  or  become 
incapacitated  by  illness  or  other  causes. 

♦  ♦    ♦ 

Yvliether  existing  inheritance  and  succession 
laws  accomplish  this  object  is  a  subject  by 
itself. 

The  points  we  wish  to  impress  here  are ; 
'      Property  is  so  essentially  sl  community  cre- 
ation that  individuals  —  poor  and  rich  —  come 
and  go  without  lessening  the  wealth  of  the  com- 
'\i  munity  by  so  much  as  a  penny. 


Only  for  Life 


If  Mr.  Rockefeller  should  die  tomorrow  tlie 
wealth  of  the  country  and  the  world  would  not 
be  increased  or  decreased  by  a  single  farthing. 
There  would  be  a  shifting  of  titles  under  the 
law,  but  that  is  all.  And  if  it  so  happened  the 
law  could  find  no  children  or  relatives  to  in- 
herit and  no  will  disposing  of  the  estate,  then 
the  community  would  take  it  all. 

We  might  put  the  matter  this  way ;  the  com- 
munity would  first  do  all  it  could  to  find  a  will 
disposing  of  the  estate;  failing  to  find  a  will  I 
the  community  would  then  do  all  it  could  to  I 
find  relatives  to  inherit;  failing  to  find  rela-  ' 
tives  the   community  would   reluctantly  take 
over  the  vast  fortune  and  try  to  do  the  best  it 
could  with  it. 

Yvliy  do  we  say  "  reluctantly,  "  when  most 
people  would  say  the  public  vrould  be  mighty 
glad  to  get  the  fortune  % 

We  say  ^'reluctantly"  because  that  is  the 
real  attitude  of  the  community  toward  succes- 
sion generally.  This  is  demonstrated  by  the 
fact  that  every  com.munity  does  provide  by 
law  that  every  effort  shall  be  made  to  find 
individuals  to  take  the  property  and  manage  it./. 


72  Property 

If  experience  of  both  tribes  and  civilized 
peoples  had  not  demonstrated  that  this  is  the 
wiser  economic  course,  communities  long  ago 
would  have  established  the  custom  of  com- 
munity succession. " 

As  regards  a  given  fortune  the  unthinking 
portion  of  the  public  might  be  glad  if  no  rela- 
tives could  be  found,  but  that  would  not  be  the 
true  and  logical  attitude  of  the  community;  the 
feeling  of  satisfaction  in  the  particular  case 
would  be  diametrically  opposed  to  the  spirit  of 
the  inheritance  laws. 

«s»     '•♦    ^ 

Grovernments  the  world  over  are  interfering 
more  and  more  with  private  control  of  prop- 
erty, to  the  extent  of  limiting  and  even  abolish- 
ing it.     On  one  pretext  and  another  govern- 
ments are  appropriating,  not  to  say  confiscat- 
ing, larger  and  larger  percentages  of  estates 
(t)   j  and  possessions.    From  a  stamp  tax  on  a  deed 
2-     '  to  an  inheritance  or  succession  tax ;  from  a  suc- 
2-        cession  tax  to  the  appropriation  of  the  entire 
estate  where  there  are  no  heirs  and  no  will,  it 
is  but  a  matter  of  degree  in  the  assertion  of  the. 
superior  rights  of  the  community — the  asser- 


Only  for  Life  73 

tion    of    the    real   ownershix)    as    against    tlie 
nominal. 

In  Germany,  even  prior  to  the  World  War, 
the  need  of  public  revenue  was  so  great  that 
imperial  right  of  succession  {Reicliserbreclit) 
was  seriously  advocated. 

One  form  of  the  proposition  was  that  first  of 
all  the  tax  on  inheritance  should  be  heavy;  sec- 
ondly that  beyond  brothers  and  sisters  no  col- 
lateral relations  should  inherit  unless  specifi- 
cally provided  for  by  will,  but  that  all  property 
now  passing  by  law  to  such  distant  relations 
should  pass  to  the  state. 

It  was  estimated^  that  this  change  in  the 
laws  of  succession  would  yield  the  state  over 
five  hundred  millions  of  marks. 

If  it  did  not  jdeld  sufficient  revenue,  obvi- 
ously the  next  step  along  the  same  line  would 
be  for  the  state  to  take  the  place  of  brothers 
and  sisters,  or  take  one-half  that  goes  to 
children,  and  so  on  to  the  taking  of  all  a  man 
leaves. 

Granting  the  power  and  the  right  of  the  state 


•  Bernhardi,  Germany  and  the  Next  War,  pp.  269-271, 


74  Property 

so  to  do,  the  vital  question  is  the  economic 
expediency. 

Up  to  certain  limits  of  appropriation  by  the 
state  the  individual  might  not  be  discouraged. 
Beyond  certain  limits  the  incentive  to  the  in- 
dividual to  put  forth  his  best  efforts  all  his  life 
long,  would  diminish. 

♦    ♦    ♦ 

In  the  United  States  the  powers  of  Congress 
and  the  various  state  legislatures  to  deal 
arbitrarily  with  property  rights  are  limited  by 
the  federal  and  state  constitutions. 

The  constitutional  restrictions  upon  the 
powers  of  legislatures  have  led  the  American 
people  to  believe  there  is  something  sacred  in 
property  rights,  something  that  is  above  and 
beyond  the  power  of  the  coimnunity  to  do  with 
it  as  it  pleases. 

There  is  nothing  in  this  notion. 

/      The  community  as  a  whole  is  all-powerful  to 
regulate  its  internal  affairs  according  to  its 

.  best  judgment. 
/'  This  truth  is  recognized  in  the  United  States 
by  the  power  in  the  people  to  change  their  con- 

,  stitutions  as  they  please. 


Only  for  Life  75 

While  the  present  constitutions  stand,  cer- 
tain rights  —  such  as  certain  property  rights 
—  are  above  the  powers  of  legislatures  to  cur- 
tail. But  in  constitutional  conventions  the 
people  can  create  and  suppress  rights  to  suit 
themselves.  They  can  abolish  constitutions  \ 
and  establish  any  form  of  socialism  or  com- 
munism they  desire.  They  can  limit  the  rights 
of  the  individual  in  any  manner  they  deem  best. 

A  man's  right  to  what  he  has  depends  wholly 
upon  the  attitude  of  those  about  him.  He  has 
no  right  beyond  social — i.  e.  commercial  recog- 
nition. If  the  community  wants  what  the  in- 
dividual has,  it  will  take  it  away  from  him,  and 
he  will  never  think  of  asserting  a  rigJit  against 
the  overwhelming  voice  of  the  community. 

But  if  the  community  recognizes  the  fact 
that  it  is  better  for  all  that  the  individual's 
dominion  be  recognized  within  greater  or  lesser 
limits,  then  private  property — i.  e.  private  con- 
trol— begins  and  is  established. 

For  instance  a  man  may  "  ov.ai  "  for  miles 
the  land  on  both  sides  of  a  navigable  stream, 
but  the  community  does  not  permit  him  to  as- 
sert any  ownership  over  the  stream.  I 


76  Property 

Again  a  man  may  * '  own  ' '  a  large  ranch  and 
all  the  roads  through  it.  The  connnunity  de- 
velops to  a  point  where  it  wants  the  roads  so 
it  appropriates  them,  and  it  may  cut  others 
and  allow  railroads  to  condemn  rights  of  way, 
etc.,  etc. 

***    ***    *♦* 

Everybody  recognizes  the  right  of  the  com- 
munity to  pass  the  most  stringent  law^s  affect- 
ing personal  liberty,  affecting  the  right  of  the 
individual  to  do  things ;  it  goes  without  saying 
that  the  right  of  the  community  to  pass  laws 
affecting  the  right  of  the  individual  to  own 
things  is  even  clearer. 

It  is  all  a  matter  of  conduct  anyway.  In 
one  case  it  is  a  matter  of  our  conduct  w^ith  rela- 
tion to  others;  in  the  other  case  it  is  a  matter 

of  our  conduct  with  relation  to  things. 
»>     *;«     »;* 

A  dog  ' '  owns  ' '  a  bone  so  long  as  he  is 
strong  enough  or  fleet  enough  to  prevent  other 
dogs  from  taking  it. 

Man  "  owns  "  a  bone  in  a  more  highly  devel- 
oped sense  because  it  has  come  to  be  the  sense, 
the  custom,  and  so  the  laiv  of  the  community 


Only  for  Life 


that  it  is  to  tlie  interest  of  the  community  that 
the  individual  should  not  be  compelled  to  light 
to  keep  what  he  has  fairly  gotten. 

It  is  even  believed  to  be  to  the  interest  of 
the  community  in  the  long  run  that  the  posses- 
sion of  the  individual  should  not  be  disturbed 
in  many  cases  where  he  got  control  unfairly. 

The  community  bars  the  rightful  owmer  after 
a  certain  length  of  time  by  statutes  of  limita- 
tion, saying  in  effect,  "Unless  you  claim  your 
bone  within  reasonable  time,  you  cannot  dis- 
turb him  who  has  it." 

<s»    ♦>    ^ 

In  short  the  recognition  of  private  property 
is  nowhere  absolute.  It  differs  in  every  coun- 
try. 

Just  noY>^  violent  assaults  are  beinsr  made 
upon  private   0A\Tiership   ot   large   estates  in  / 
countries  so  widely  different  as  Eussia,  Great 
Britain,  and  Mexico. 

From  the  land-owners  go  up  cries  of  hard- 
ship, injustice,  confiscation,  robbery,  etc.,  etc. 

Whether  any  given  proposition  of  appropria- 
tion or  confiscation  is  unfair  is  a  nice  question 
and  turns  upon  the  extent  to  which  a  eommu- 


78  Property 

nity  by  certain  laws  lias  encouraged  tlie  in- 
dividual to  do  certain  things,  and  then  by  sud- 
den reversal  of  those  laws  deprived  the  in- 
dividual of  the  fruits  of  his  labors. 

Precisely  this  sort  of  a  question  arises  with 
every  proposed  reduction  of  a  protective  tariff, 
every  proposed  law  prohibiting  the  manufac- 
ture or  sale  of  alcoholic  liquors,  and  in  lesser 
degrees  regarding  the  enforcement  of  pure 
food  laws,  etc. 

A  community  develops  along  certain  lines, 
under  certain  laws.  Capital  and  labor  are  at- 
tracted to  certain  industries. 

Suddenly  the  community  experiences  a 
change  of  heart,  laws  are  passed  that  virtually 
destroy  entire  industries,  possibly  entire  cities 
and  sections. 

There  is  no  doubt  about  the  riglit,  the  power 
of  the  community  to  do  these  things,  the  only 
question  is  one  of  economic  expediency  —  will 
the  proposed  measures  be  beneficial  to  the  en- 
tire community  in  the  long  run?  If  so  then  the 
so-called  right  of  the  individual  must  give  way ; 
or  rather  as  against  the  welfare  of  the  com- 
munity the  individual  has  no  rights.    His  true 


Only  for  Life  79 

riglits  will  be  found  to  coincide  with  the  ad- 
vancement of  the  whole. 

♦    ♦    ♦ 

Those  who  believe  in  private  property  and 
defend  it  will  make  more  headw^ay  if  they 
frankly  concede  at  the  outset  there  is  nothing 
sacred  about  it  and  that  the  community  is  free 
to  do  as  it  deems  best  with  it  —  strengthen, 
modify,  or  totally  abolish  it.  ^ 

Starting  with  those  premises  the  discussion 
becomes  dispassionate  and  scientific,  the  sole 
question  being  to  what  extent  is  the  recogni- 
tion of  private  rights  over  things  necessary  to 
the  advancement  of  the  community? 

The  world  is  getting  restless ;  it  challenges  in 
a  manner  it  never  did  before.  It  will  not  be 
silenced  by  a  ^ '  Thou  shalt  not. ' '  It  demands 
to  know  the  reason  why. 

Men  of  property  are  becoming  more  liberal. 
True,  the  great,  the  overwhelming  majority 
still  accept  their  lands  and  their  wealth — as 
the  Kaiser  accepted  his  throne  —  as  if  granted 
from  on  High,  as  possessions  so  peculiarly  and 
sacredly  their  own  that  for  others  to  interfere 
is  sacrilegious.    But  there  is  a  very  intelligent 


80  Property 

minority  composed  of  men  who  would  rather 
tliinh  than  make  money,  who  would  rather  be 
rigid  than  rich;  this  minority  are  also  asking 
U"  /  the  reason  why — why  and  how  private  rights 
I  over  things  have  come  to  be  what  they  are,  and 
whether  as  they  are,  they  are  essential  to  the 
economic,  intellectual,  and  spiritual  advance- 
ment of  the  community,  or  whether  on  the 
other  hand  some  form  of  socialism  or  commun- 
ism would  not  be  better. 

♦j»     4»     ♦!» 

A  great  many  teachers,  professors,  minis- 
ters, writers,  are  also  asking  the  reason  why. 

The  world  is  an  animated  interrogation 
mark. 
/  Not  alone  private  property,  but  every  social 
and  economic  institution  is  under  investigation. 
Time-honored  theories  and  explanations  are 
going  by  the  board.  Men  will  accept  no  man's 
say-so.  Authority  is  challenged.  People  are 
bent  upon  getting  to  the  root  of  things. 

That  is  why  the  academic  notions  regarding 
private  property  are  having  such  a  hard  time. 

That  is  why  the  land-owner,  and  the  bond- 
holder,   and   the    stockholder    are    worrying. 


^ 


Only  for  Life  81 

They  don't  know  what  is  about  to  happen.    All 
they  know  is  that  the  socialists  are  increasing 
in  numbers,  that  communists  and  anarchists 
are  found  on  every  street  corner,  and  the  man  , 
with  money  is  pointed  out  as  a  public  enemy.      / 

On  first  impression  it  would  seem  as  if  the 
cyclone  cellar  is  the  place  for  the  unhappy 
millionaire,  but  that  would  be  the  flight  of  the 
coward  and  moreover  he  could  not  take  his 
millions  with  him. 

If  ever  the  rich  man  needed  to  stand  out  in 
the  open  and  justify  his  economic  value  he 
needs  to  now. 

It  is  no  time  for  dillydallying.  If  the  people 
cannot  be  convinced  that  the  rich  man  is  at 
least  as  important  and  valuable  a  factor  in  the 
development  of  the  community  as  the  poor  man 
then  he  will  have  to  go. 

It  is  not  a  question  whether  lie,  as  an  in- 
dividual, has  a  riglit  to  his  wealth;  the  sole, 
question  is  whether  it  is  a  good  thing  for  the 
community  to  permit  him  to  exercise  that 
right;  whether  the  results  in  the  long  run  are 
better  than  if  the  community  took  over  in  some 
way  part  or  all  of  his  rights. 


82  Property 

It  is  precisely  this  very  practical  question 
that  has  not  been  fully  and  fairly  considered 
and  answered  because  the  true  nature  of  pri- 
\\vate  property  has  not  been  fully  understood. 

It  is  always  assumed  that  it  is  a  question  of 
the  community  on  the  one  side  with  little  or  no 
control  over  the  property,  and  the  individual 
on  the  other  Avith  practically  absolute  powers 
of  disposition. 

//  it  were  true  that  a  man  with  a  million  or 
ten  millions  owned  it  in  such  a  way  that  the 
community  had  little  or  no  enjojTuent  thereof, 
then  the  argument  for  private  property  would 
be  weak  indeed  —  only  the  sacred  theory  would 
sustain  it. 

But  if  it  should  be  found  to  be  true  that  the 
individual  '  *  owning ' '  a  million  virtually  sim- 
ply holds  the  nominal  title  for  life,  the  real  en- 
joyment of  practically  the  entire  fortune  being 
in  the  community,  then  a  very  different  aspect 
to  the  problem  is  presented,  and  it  is  this  as- 
pect that  has  not  been  discussed  in  the  litera- 
ture on  the  subject. 


THE  RUSSELL  SAGE  FORTUKB 

Kussell  Sage  was  famous  in  New  York  for  his 
parsimony  and  his  shrewdness.  He  lived  very 
simply  and  devoted  his  entire  time  to  loaning 
and  investing  his  money. 

Because  he  was  not  a  lavish  spender^  and  he- 
cause  he  loaned  and  invested  always  with  a 
view  to  getting  the  highest  returns  for  his 
money,  he  was  not  popular. 

Let  us  put  it  more  directly,  he  was  not  popu- 
lar because  he  was  thrift^/  and  frugal  to  a 
marked  degree. 

Curious,  is  it  not?  —  that  men  who  spend  or 
waste  wealth  with  reckless  prodigality  are  usu- 
ally popular,  even  though  they  go  bankrupt 
and  cause  losses  to  thousands,  while  men  who 
save  and  carefully  invest  productively  are 
looked  upon  as  **  closefisted  " — miserly  —  and 
are  unpopular. 


*  When  the  elevated  roads  were  first  operated  in  New 
York  the  fare  was  ten  cents  except  during  the  "  rush  " 
hours  morning  and  evening,  A  friend  who  knew  Sage  says 
he  often  saw  him  standing  in  line  waiting  for  the  five-cent 
hour. 

83 


84i  Fropcrtij 

It  is  because  people  do  not  stop  to  think 
whose  money  is  being  wasted.  The  common 
impression  is  that  the  millionaire  who  spends 
extravagantly  is  simply  wasting  his  wealth, 
that  while  he  may  go  bankrupt  others  in  the 
community  get  some  benefit.  Whereas  the 
truth  is  that  every  dollar  wasted  is  community 
wealth,  the  individual  simply  has  the  'power  — 
the  legal  "  right  " — to  w^aste. 

It  does  not  matter  whether  the  money  is 

spent  on  ugly  monuments,  yachts,  worthless 

pictures,  fast  horses,   castles,  dinners,  balls, 

etc. ;  every  dollar  so  spent  is  community  ivealth. 

♦    ♦    ♦ 

Why,  then,  should  a  man  like  Eussell  Sage, 
who  saves  all  his  life  be  unpopular  while  an- 
other who  recklessly  spends  the  fortune  he  has 
made  or  inherited  be  popular? 

The  obvious  ansv/cr  is  that  the  public  does 
not  understand  the  economic  ivorth  of  the  fru- 
gal man  and  the  economic  worthlessness  of  the 
foolish  spender. 

But  there  is  another  side  —  a  curious  psy- 
chological side.  The  public  —  like  the  Lord  — 
'Moveth  a  cheerful  giver."     From  time  im- 


The  Russell  Sage  Fortune  85 

memorial  people  have  thoughtlessly  applauded 
the  man  who  seemed  to  care  so  little  about 
money  he  threw  it  right  and  left.  His  reck- 
less freedom  and  generosity  have  obscured  his 
economic  and  other  sins. 

♦    ♦    ♦ 

The  attitude  of  the  public  toward  spending 
will  surely  change  as  it  begins  to  understand 
that  the  wealth  wasted  is  its  wealth,  made  by 
it,  accumxulated  by  it,  though  the  recognition  of 
certain  property  rights  has  given  the  in- 
dividual the  potver  to  do  with  it  as  he  pleases. 


♦I*    ♦> 


From  an  economic  point  of  view  Russell 
Sage  should  have  been  highly  valued  by  the 
people  of  New  York,  inasmuch  as  he  was 
quietly,  and  at  ?  loiv  cost  to  the  community, 
loaning,  reloaning,  and  reinvesting  many  mil- 
lions of  money,  and  it  was  a  matter  of  com- 
ment that  he  exercised  more  sagacity  and  fore- 
sight than  almost  any  banker  in  the  city. 

He  may  have  been  '' closefisted,"  '*  miser- 
ly," a  hard  man  to  deal  w^ith;  he  may  have 
exacted  a  high  rate  of  interest ;  may  have  called 
for  his  *'  pound  of  flesh  "  when  due;  but  these 


86  Property 

arc  all  economic  traits,  the  traits  of  a  relent- 
less trustee  of  public  funds. 

He  did  not  permit  his  sympathies  or  his 
imagination  to  swerve  his  business  judgment. 
Seemingly  his  one  aim  in  life  was  to  keep 
every  dollar  he  could  get  'productively  em- 
ployed. 

♦  ♦    ♦ 

While  he  w^as  a  rich  man  in  the  popular  sense 
'of  the  term  he  lived  all  his  life  as  simply  as 
many  men  working  on  fairly  modest  salaries. 

His  entire  wealth  tvas  in  the  possession  and 
control  of  others. 

♦  ♦    ♦ 

He  had  no  children.  When  he  died  in  1906 
he  left  by  will  $650,000  to  some  twenty-nine 
relatives;  the  entire  residue,  over  $60,000,000, 
he  left  to  Mrs.  Sage  to  do  with  as  she  pleased. 

♦  ♦    ♦ 

His  fortune  when  he  died  consisted  of; 

Cash  — $612,619. 

This  represented,  no  doubt,  his  bank  bal- 
ances ;  money  paid  in  faster  than  he  could  loan 
it  out.  But,  if  in  bank,  it  would  be  produc- 
tively engaged  through  bank  loans. 


The  Bussell  Sar/e  Fortune  87 

Forty  pieces  of  real  estate  —  $1,945,500. 

His  investments   in   real   estate   were   not 
large.    It  is  worth  noting  in  passing  that  his  \ 
household  furniture  in  his  very  unpretentious 
home,  No.  632  Fifth  Avenue,  was  appraised  at 
only  $8,052. 

There  were  some  twenty-three  open  accounts 
— money  due  him  from  various  people;  and 
fourteen  mortgages. 

The  bulk  of  the  estate  consisted  of  some  152 
loans  to  bankers,  brokers,  partnerships,  cor- 
porations, individuals,  etc.  This  was  his  spe- 
cialty, loaning  money  to  men  in  need  of  it,  and 
the  greater  their  need  the  greater  his  oppor- 
tunity. He  would  often  make  loans  at  times 
and  under  conditions  when  banks  hesitated.  / 
Naturally  he  would  exact  his  compensation  for 
the  risk,  and  the  very  men  benefited  would 
often  denounce  him  as  a  usurer.  But  because 
his  fortune  was  ^'  his  own,"  that  is  to  say  be- 
cause he  was  loaning  "his  own"  money  in- 
stead of  the  money  of  depositors  he  could  take 
risks  banks  could  not  take,  and  it  was  an  eco- 
nomic advantage  to  the  community  to  have 


88  Projx'rtij 

Eussell  Sage's  millions  available  in  emergen- 
cies. 

One  has  simply  to  look  over  tlie  list  of  loans 
outstanding  at  the  time  of  his  death  —  loans 
ranging  from  $500,000  doY\ai  —  to  appreciate 
the  great  variety  of  individuals,  partnerships 
and  companies  he  aided. 

In  addition  to  his  loans  he  left  stocks  and 
bonds  of  over  eighty  steam  and  street  rail- 
roads, and  some  sixty  industrial  companies; 
stocks  in  six  banks ;  also  city  and  state  bonds. 
♦    ♦    ♦ 

/  He  performed  the  functions  of  a  bank  except 
that  instead  of  receiving  deposits  and  loaning 
the  money  of  others  he  had  quite  enough  to  do 
loaning  and  investing  his  own. 

That  he  met  an  economic  need  and  was  a  val- 
uable economic  factor  in  the  development  of 
the  community  was  demonstrated  by  the  price 
the  community  was  glad  to  pay  for  his  services. 

He  may  have  had  personal  characteristics 
which  made  him  unpopular,  but  for  that  matter 
most  banks  are  not  popular  institutions  —  that 
is  there  is  a  popular  feeling  against  bankers  as 
compared  with  merchants  and  manufacturers. 


Tlte  Bussell  Sage  Fortune  89 


In  the  popular  mind  the  manufacturer  is 
looked  upon  as  a  'producer  like  the  farmer;  the 
merchant  is  looked  upon  as  a  necessary  and 
useful  factor  in  distribution;  but  the  popular 
mind  fails  to  grasp  the  economic  importance 
of  the  banker  because  it  looks  as  if  he  simply 
juggled  with  money,  producing  nothing,  dis- 
tributing nothing. 

The  thinking  man  knows  the  banker  per- 
forms just  as  useful  services  as  the  manufac- 
turer or  the  merchant;  the  banker  is  an  eco- 
nomic necessity  in  order  that  the  farmer,  the 
manufacturer,  the  merchant  may  develop  and 
make  the  most  of  his  opportunities. 

As  we  approach  the  utopia  the  need  for 
bankers  and  money-loaners  as  we  know  them 
may  lessen,  but  if  so  it  will  be  because  of  some 
more  scientific  and  economical  method  of  per- 
forming the  services  they  now  perform. 

One  thing  is  certain  the  economic  utopia  will 
be  attained  —  if  ever  —  only  along  the  lines  of 
increasing  mobilit}^  of  wealth.  Economic  prog- 
ress is  in  direct  ratio  to  the  ductility  of  wealth, 
to  the  safety,  ease,  and  rapidity  with  which  it 
flov/s  from  point  to  point,  from  enterprise  to 


90  Propertij 

entGrx)rise.    At  present  tliis  ductility  depends 
almost  entirely  upon  the  services  of  bankers 
and   of   individuals,   like    Sage,  who   perform 
services  akin  to  those  of  bankers. 
*♦*    *•*    *♦♦ 

What  happened  after  his  death? 
,     The  fortune  was  steadily  withdrawn  from 
productive  uses  and  devoted  to  charitable  and 
philanthropic  purposes. 

Naturally  Mrs.  Sage  had  neither  the  desire 
nor  the  ability  to  go  on  investing  and  reinvest- 
ing in  order  to  accumulate  more.  That  is  a 
man's  work. 

Her  interests  and  inclination  were  in  other 
directions,  in  the  direction  of  distribution 
rather  than  accumulation. 

It  is  as  if  he  and  she  had  formed  a  life  part- 
nership wherein  it  was  agreed  that  he  should 
devote  all  his  life  to  accumulation,  and  on  his 
death  she  should  undertake  the  far  more  diffi- 
cult task  of  distribution.  He  took  the  hard, 
economic,  unpopular  work,  leaving  to  her  the 
generous,  philanthropic,  popular  task. 

Each  may  be  a  valuable  factor  in  the  life 
and  development  of  the  community. 


The  liiisseU  Sage  Fortune  91 

But  the  risk  to  the  commmiity  began  after 
his  death,  when  the  work  of  tvitJidrawing  and 
spending  the  fortune  began. 
♦    ♦    ♦ 

During  his  lifetime  he  had  only  pieces  of 
paper,  his  fortune  was  a  potentiality,  it  did  not 
exist  except  on  paper. 

After  his  death  the  fortune  began  to  emerge, 
so  to  speak,  to  materialize  as  piece  after  piece 
of  paper  w^as  disposed  of,  as  interest  and  divi- 
dends were  held  and  spent  instead  of  being- 
reinvested  productively. 

Much  of  the  fortune  still  exists  in  paper,  is 
still  engaged  productively,  but  year  by  year 
Mrs.  Sage  drew  out  large  amounts  and  spent 
the  same  for  philanthropic  and  public  objects. 

So  far  as  the  community  is  concerned  it  is 
as  if  the  state  had  inherited  the  fortune  and 
was  steadily  devoting  it  to  the  same  uses,  only 
the  cost  -of  distribution  is  very  different. 

The  cost  to  the  community  of  distributing 
the  Sage  fortune  —  up  to  the  date  of  Mrs. 
Sage's  death — was  what  Mrs.  Sage  spent  on 
herself  and  what  she  paid  her  advisers  —  prob- 
ably not  a  large  amount  all  told. 


92  Property 

f  If  the  state  had  inherited  the  fortune,  every- 
one knows  that  a  large  portion  of  it  would  have 
been  wastefully  used  in  the  sux^port  of  offices 
and  office-holders. 

The  public  would  rather  leave  the  distribu- 
tion of  these  millions  to  a  woman  and  her 
trusted  advisers,  people  wiiose  sole  thought  is 
to  do  all  the  good  they  can,  than  leave  it  to 
either  the  State  House  in  Albany  or  the  City 
Hall  in  New  York. 

Mrs.  Sage  and  her  advisers  may  have  made 
mistakes,  but  they  were  honest  mistakes  of 
heart  and  judgment.  They  did  not  plunder 
the  estate  or  spend  a  dollar  for  political  ad- 
vantages. 


One  of  the  greatest  defects  of  our  governing 
and  administrative  mechanism  is  that  the  com- 
munity has  practically  no  machinery  for  the 
\  spending  of  money  except  political. 

It  is  a  common  knowledge  that  a  man  may 
be  a  very  good  legislator  and  a  very  poor  busi- 
ness man  or  philanthropist. 

It  is  a  fatal  defect  so  far  as  efliciency  and 
disinterestedness  are  concerned  to  permit  Con- 


The  Russell  Sar/e  Fortune  93 

gress  or  any  legislative  body  to  have  anything 
to  do  with  the  manner  in  which  money  shall  be 
spent  by  the  spending  departments. 

A  business  department  such  as  the  post  office 
should  not  have  its  headquarters  at  Washing- 
ton, The  gross  impropriety  of  the  railroads 
of  the  country  maintaining  headquarters  in 
Washing-ton  has  been  demonstrated,  yet  if  the 
government  bought  the  railroads  the  head- 
quarters would  be  at  once  established  within 
the  shadow  of  the  capitoP  with  the  inevitable 
result,  the  railroads  would  become  a  part  of 
the  huge  political  machine. 

We  are  beginning  to  see  why  all  advanced 
people  instinctively  uphold  property  rights  and 
extend  them  after  the  death  of  the  individual. 

First  of  all  it  is  because  fortunes  that  exist  \) 
on  paper  are  in  reality  more  efficiently  engaged  ) 
in  production  than  if  the  community  had  the  ;' 
title. 

Secondly^  when  those  who  have  accumulated 
or  inherited  the  fortunes  begin  spending  and 
giving,  as  a  rule  they  do  it  with  less  waste  and  , 
less  cost,  and  with  finer  foresight  and  imagina-  j 

•  As  has  been  the  case  during  the  war. 


/ 


94  Property 

Hon  than  if  the  community  seized  and  spent  the 
fortunes. 

♦    *>    ♦ 

Mrs.  Sage  died  November  4,  1918,  leaving  a 
v^ill  vrhich  made  a  final  distribution  of  the  Sage 
fortune. 

During  the  twelve  years  she  survived  her 
husband  she  gave  away  between  thirty  and 
forty  millions  of  dollars,  in  part  as  follows : 

rOE   CHAKITABLE   INSTITUTIONS 

An  endowment  fund  of  $10,000,000  to  the 
Russell  Sage  Foundation,  the  income  to  be 
used  for  the  betterment  of  social  and  living 
conditions. 

To  the  Eussell  Sage  Institute  of  Pathology, 
an  endowTuent  fund  of  $300,000. 

For  the  Association  for  Eelief  of  Respect- 
able, Aged,  Indigent  Females,  an  addition  to 
its  building  on  104th  Street,  $25,000. 

Adirondack  Cottage  Sanitarium,  $25,000. 

Working  Girls'  Home  on  East  Twelfth 
Street,  $25,000. 

To  the  Young  Men's  Christian  Association, 
for  a  new  building  for  the  International 
Committee,  on  Twenty-eighth  Street,  New 
York,  $350,000. 

For  addition  to  Y.  M.  C.  A.  Building  at 
Brooklyn  Navy  Yard,  about  $340,000.     For 


The  Russell  Sage  Fortune  95 

building  at  Fort  McKinley,  Philippines,  $25,- 
000;  for  Long  Island  Railroad  Branch,  new 
building  at  Long  Island  City,  $100,000;  for 
new  building  at  Fort  Slocum,  $50,000. 

EDUCATIOXAI.   INSTITUTIONS 

Rensselaer  Polytechnic  Institute,  Troy,  $1,- 
000,000. 

Troy  Female  Seminary,  (Emma  Willard 
School),  $1,000,000. 

Harvard  University,  a  new  dormitory. 

Yale  Universit}^,  the  Hillhouse  property,  con- 
sisting of  thirty  acres,  at  a  cost  of  about 
$650,000.  This  constitutes  what  is  now  known 
as  the  Pierson-Sage  Campus. 

Princeton  University,  dormitories  and  tower. 
New  York  University,  for  the  purchase  of 
additional  land  about  $300,000. 

Northfield  Seminary,  a  memorial  chapel. 

Gifts  to  Syracuse  University,  Idaho  Indus- 
trial Institute,  Lincoln  University,  Girls' 
School  at  Constantinople,  and  the  Berry 
School  at  Rome,  Georgia. 

To  the  Metropolitan  Museum  of  Art,  the 
Bolles  Collection  of  American  Colonial  fur- 
niture and  household  art. 

FOR  NATIONAL  OR  CITY  PURPOSES 

Constitution  Island,  opposite  West  Point, 
purchased  and  presented  to  the  United  States 
Government. 


96  Property 


The  City  Hall  in  New  York,  as  respects  the 
rotunda  and  the  governor's  room,  restored 
under  the  direction  of  the  Art  Commission. 

Large  plantations  of  rhododendrons,  at  a 
cost  of  about  $60,000,  for  Central  Park. 

Libraries  of  technical  books  to  each  of  the 
258  fire  houses  in  New  York  City. 

For  Sag  Harbor,  Long  Island,  a  public  li- 
brary, including  land,  building,  books,  and 
endowment,  a  new  public  school,  and  an  ex- 
tensive playground. 

A  bird  refuge  in  southern  Louisiana,  known 
as  Marsh  Island,  consisting  of  about  70,000 
acres. 

By  her  will  she  distributed  the  balance  of  the 
estate.  Aside  from  a  bequest  of  eight  millions 
to  her  brother  and  other  personal  bequests 
amounting  to  about  two  hundred  thousand  dol- 
lars the  entire  fortune  then  in  her  hands,  esti- 
mated at  over  forty  millions,  was  given  away. 

On  the  face  of  the  will  the  residue  w^ould  be 

distributed  approximately  as  follows: 

Eussell  Sage  Foundation $5,600,000 

Troy  Female  Seminary 1,600,000 

AVoman's  Hospital  in  the  State  of 

New  York 1,600,000 

Board  of  Plome  Missions  of  the 
Presb3i;erian  Church  of  America 
(Woman's  Executive  Committee).  1,600,000 


The  Russell  Sage  Fortune  97 

Woman's  Board  of  Foreign  Mis- 
sions of  the  Presbyterian  Church.  1,600,000 
New  York  City  Mission  and  Tract 

Society   1,600,000 

American  Bible  Society 1,200,000 

New  York  Bible  Society 400,000 

Children's  Aid  Society 1,600,000 

Charity  Organization  Society 1,600,000 

Presbyterian  Board  of  Eelief  for 
Disabled  Ministers  and  the  Wid- 
ows   and    Orphans    of    Deceased 

Ministers    800,000 

Metropolitan  Museum  of  Art. . . . .  1,600,000 
American  Museum  of  Natural  His- 
tory      1,600,000 

New  York  Botanical  Garden ,     800,000 

New  York  Zoological  Society 800,000 

New  York  Public  Library 800,000 

Troy  Polytechnic  Institute 800,000 

Union  College,  Schenectady 800,000 

Syracuse  University   1,600,000 

Hamilton  College,  Clinton,  N.  Y.. .      800,000 

New  York  University 800,000 

Yale  University 800,000 

Amherst  College  800,000 

Williams   College    800,000 

Dartmouth  College 800,000 

Princeton  University  800,000 

Barnard  College   800,000 

Bryn  Mawr  College 800,000 

Vassar  College   800,000 

Smith  College 800,000 

Wellesley  College  800,000 

TusKegee  Normal  and  Industrial 
Institute 800,000 


98  Property 

New  York  Infirmary  for  Women 

and  Children   800,000 

Presbyterian  Hospital  in  the  City 

of  New  York 800,000 

State  Charities  Aid  Association. . .      800,000 

Hampton  Institute  800,000 

Troy  Female  Seminary 50,000 

Association  for  the  Belief  of  Re- 
spectable, Aged,  Indigent  Females 

in  the  City  of  New  York 125,000 

Woman's  Hospital  in  the  State  of 

New  York 50,000 

Board  of  Home  Missions  of  the 
Presbyterian  Church  of  the  United 
States  of  America  (Woman's  Ex- 
ecutive Committee  of  Home  Mis- 
sions)         25,000 

Woman's  Board  of  Foreign  Mis- 
sions of  the  Presbyterian  Church. .        25,000 
New  York  City  Mission  and  Tract 

Society  (Woman's  Board) 20,000 

New  York  Female  Auxiliary  Bible 

Society 10,000 

Children's  Aid  Society  of  the  City 

of  New  York 10,000 

Charity    Organization    Society    of 

the  City  of  New  York 20,000 

First  Presbyterian  Church  of  Syra- 
cuse          10,000 

First  Presbyterian  Church  of  Sag 

Harbor   10,000 

Society  for  the  Relief  of  Half-Or- 
phan and  Destitute  Children  of  the 
City  of  New  York 25,000 


The  Russell  Sage  Fortune  99 

New  York  Institute  for  the  Deaf 

and  Dumb 25,000 

Home  for  the  Friendless 100,000 

New  York  Excliano-e  for  Women's 

Work    25,000 

Woman's   National   Sabbath  Alli- 
ance      25,000 

Ladies'  Christian  Union  of  the  City 

of  New  York   100,000 

Working   Women 's    Protective 

Union   10,000 

Servants   of  Relief  for  Incurable 

Cancer   25,000 

Salvation  Army   25,000 

Park  College   100,000 

Idaho  Industrial  Institute 200,000 

Old  Ladies'  Home  at  Syracuse. . . .  25,000 
Northlield    Schools     ( Northfield 
Seminary     and     Mount     Hermon 

Boys'  School)    100,000 

Middlebury  College   100,000 

Eutgers  College   100,000 

Y.  M.  C.  A.  of  the  City  of  New  York  100,000 

Y.  W.  C.  A.  of  the  City  of  New  York  100,000 

Mount  Sinai  Hospital 100,000 

Syracuse  Universitv    100,000 

Hampton  Institute  ' 100,000 

In  the  twelve  years  since  the  death  of  Russell 
Sage  the  benefactions  of  Mrs.  Sage  reached  a 
total  estimated  to  be  between  $35,000,000  and 
$40,000,000,  so  that,  during  her  life  and  after 
her  death,  her  gifts  for  public  uses  make  up  a 


100  Pyopertij 

sum  between  $75,000,000  and  $80,000,000.  The 
philanthropies  of  John  D.  Rockefeller  and  An- 
drew Carnegie  are  the  only  ones  believed  to 
have  been  greater. 

Mrs.  Sage  had  used  a  part  of  the  capital  as 
well  as  the  income  of  the  estate  for  her  phi- 
lanthropies, so  that  the  property  she  leaves  is 
less  by  several  millions  than  that  which  was 
left  to  her.  She  received  from  her  husband's 
estate  $64,153,800.91. 

♦    ♦    ♦ 

The  first  and  obvious  comment  is  that  a 
woman  of  ninety  could  not  possibly  have  ascer- 
tained the  needs  of  all  the  institutions  and 
objects  named. 

She  was  guided  by  either  her  mere  impulses 
or  by  her  advisers.  If  by  her  advisers  then 
they  and  not  she  distributed  the  fortune  and 
as  they  are  not  named  publicly  and  assume  no 
responsibility  the  net  result  is  the  arbitrary 
withdrawal  of  millions  from  productive  em- 
ployment and  the  distribution  of  same  by  men 
— her  advisers  —  who  are  not  named  and  not 
called  upon  to  justify  their  judgment. 

No  doubt  the  institutions  and  objects  named 


The  Bussell  Sage  Fortune  101 

will  make  good  use  of  the  bequests  and  to  the 
extent  they  do,  the  money  may  be  productive  of 
social  good  in  a  finer  sense  than  if  left  in  com- 
merce and  industries. 

The  thought  we  have  in  mind  here  is  the 
chance  the  community  runs  when  it  permits  and 
even  encourages  elderly  individuals  to  arbi- 
trarily transfer  their  fortunes  from  invest- 
ments— -productive  employment  —  to  a  long- 
list  of  objects,  the  needs  of  which  cannot  be 
accurately  ascertained  by  them. 

The  community  may  be  immensely  benefited 
by  the  foresight,  the  imagination,  the  construc- 
tive genius  of  the  giver ;  per  contra  it  may  be 
economically  injured  by  the  folly,  the  egotism, 
the  ignorance  of  the  giver. 
♦    ♦    ♦ 

The  following  editorial  from  a  leading  New 
York  daily  is  a  fair  sample  of  the  press  com- 
ments on  the  final  distribution  of  the  Sago 
fortune : 

It  would  be  difficult  to  dispose  of  a  great  estate 
more  sagaciously  and  justly  than  Mrs.  Russell  Sage 
has  done  by  her  will.  She  leaves  some  forty  millions 
for  educational,  philanthropic  and  charitable  pur- 
poses.    Colleges,  libraries,  hospitals,  the  Metropolitan 


II 


102  Property 

ifuseum  of  Art  and  the  American  Museum  of  Natural 
History,  the  Children's  Aid  Society,  the  Charity  Or- 
ganization Societ}^  the  Infirmary  for  "Women  and 
Children,  and  many  other  institutions  are  splendidly 
remembered.  There  are  specific  legacies  to  many  or- 
ganizations. To  name  only  Mount  Sinai  Hospital, 
Hampton  Institute,  the  Salvation  Army,  the  Working 
Woman's  Protective  Union,  the  New  York  Institution 
for  the  Deaf  and  Dumb,  the  Home  for  the  Friendless, 
is  to  illustrate  faintly  the  scope  of  Mrs.  Sage's  bene- 
factions. The  most  cynical  social  sorehead  and 
growler  at  philanthropy  will  be  pleased  by  her  re- 
membrance of  her  old  servants. 

In  the  twelve  years  from  the  time  of  Mr.  Sage's 
death  Mrs.  Sage  gave  for  public  uses  betw^een  thirty- 
five  and  forty  millions.  By  will  she  has  given  away 
forty  millions  more.  The  greater  part  of  the  fortune 
accumulated  hy  Mr.  Sage  has  been  returned  to  the 
puhlic.  It  is  the  fashion  for  light-brained,  envious 
folk,  amateur  socialists  or  budding  Bolsheviki,  to 
abuse  "wealth"  and  gnash  tlieir  teeth  at  "the  rich." 
I  Yet  how  swiftly  the  great  fortunes  melt;  in  a  genera- 
tion or  two  they  generally  come  hack  to  the  public. 
It  took  only  twelve  years  to  scatter  most  of  Mr. 
Sage's,  or,  rather,  to  invest  it  forever  in  trust  for  good 
objects.  As  a  rule  the  Americans  who  get  notably 
rich  make  the  people  their  heir. 

This  sort  of  praise  is  both  thoughtless  and 
mischievous. 

Attention  is  called  especially  to  the  idea 
conveyed  in  the  lines  italicised  by  the  writer, 


The  Russell  Sage  Fortune  103 

the  statement  the  fortune  has  at  last  ''been 
returned  to  the  'public,"  as  if  in  some  manner 
—  by  inference  more  or  less  reprehensible  — 
the  public  had  been  deprived  of  the  fortune     i 
during  Sage's  lifetime.  / 

Almost  precisely  the  reverse  was  true. 

It  was  during  the  accumulation  of  the  for- 
tune that  the  public  enjoyed  full  possession  and 
use,  and  if  Russell  Sage  the  day  before  his 
death  had  burned  every  note,  every  bond,  every 
share  of  stocks,  every  account-book — in  short 
every  piece  of  paper  evidencing  his  legal  title 
to  his  fortune  so  that  no  one,  not  even  the  state, 
could  trace  and  draw  out  a  dollar  of  his  for- 
tune, the  public  would  have  been  far  more 
materially  served  than  by  the  attempts  made 
to  draw  out  from  productive  uses  his  millions 
and  devote  them  to  educational,  philanthropic, 
and  charitable  uses.  .// 

The  question  of  ultimate  value  to  society 
would  depend  upon  the  balance  that  would  have 
to  be  struck  between  the  value  of  a  fortune  of 
sixty  or  eighty  millions  continuing  undisturbed 
in  industrial,  commercial,  banking,  railroading, 
and  other  productive  pursuits,  and  the  value  of 


104  Property 

the  same  fortune  withdrawn  and  devoted  to 
educational,  charitable,  and  philanthropic  pur- 
poses. 

Such  a  balance  can  never  be  straek  in  figures. 
The  wise  and  far-seeing  expenditure  of  a  mil- 
lion dollars  in  some  commercially  unproduc- 
tive manner,  such  as  the  founding  of  a  library, 
a  school,  an  art  museum,  a  settlement  house, 
and  so  on,  may  be  of  incomparably  greater 
value  spiritually,  aesthetically,  socially,  and 
ultimately  economically,  than  leaving  the  mil- 
lion in  a  steel  plant  or  a  railroad.  Everything 
depends  upon  the  wisdom  and,  above  all,  the 
fine  imagination  of  the  giver. 
♦    ♦    ♦ 

The  point  here  is  that  before  the  giving 
'  begins  the  fortime  is  unquestionably  in  the  pos- 
session of  the  public,  and  not  a  dollar  can  be 
given  away  except  the  dollar  is  first  taken  from 
those  using  it  productively.  Whether  the  pub- 
lic ever  again  gets  the  benefit  of  the  dollar 
depends  upon  the  wisdom  of  the  donor  and  the 
social  necessity  of  the  object,  philanthropic  or 
otherwise,  to  which  the  money  is  devoted. 


The  Bussell  Sage  Fortune  105 

Mrs.  Sage  was  seventv-eiglit  when  lier  hus- 
band died.  She  was  ninety  when  she  died. 
Generally  speaking  men  and  women  between 
eighty  and  ninety  are  not  capable  physically 
or  mentally  of  suddenly  undertaking  the  giving 
away  of  large  amounts  of  money. 

Even  if  they  are  mentally  quite  vigorous  they 
lack  the  phj^sical  strength  to  make  the  proper 
inquiries  and  investigations,  and  critically  fol- 
low results. 

Therefore,  generally  speaking,  laws  and  insti- 
tutions w^hicli  give  the  extremely  aged  such 
powers  call  for  critical  comment  to  say  the 
least,  and  indiscriminate  praise  of  such  giving 
as  a  "  return  to  the  public,"  is  hased  on  a 
fundamental  misconception. 

These  conclusions  are  so  diametrically  op- 
posed to  popular  impression  they  will  bear 
restating. 

♦♦♦     *:♦     ♦;♦ 

So  long  as  a  man  is  industriously  engaged 
in  accumulating  his  fortune  by  fair  and  honor- 
able means  the  community  is  a  gainer,  because 
by  his  productive  efforts  he  is  steadily  adding 
to  the  sum  total  of  actual  wealth,  while  at  the 


/I 


106  Property 

same  time  lie  is  increasing  his  nominal  wealth 
—  i.  e.,  his  legal  right  to  withdraiv  and  divert 
some  to  other  uses  when  he  pleases. 

♦  ♦    ♦ 

So  long  as  the  fortune  of  an  individual  is  left 
in  a  business,  the  economic  effect  from  year  to 
year  is  precisely  as  if  the  community  owned 
the  fortune.  The  community  gets  the  services 
of  the  individual  at  the  cost  of  what  he  draws 
out  for  living  and  other  personal  expenditures. 

♦  ♦    ♦ 

/  The  danger  of  loss  and  interruption  of  pro- 
ductive processes  begins  when  the  individual 
begins  to  assert  his  ownership  —  when  he 
begins  to  withdraw  his  fortune  and  devote  it  to 
other  purposes. 


♦>    ♦> 


And  the  danger  lies  in  the  possibility  he  will 
spend  it  or  give  it  away  in  such  a  manner  that 
it  will  do  the  community  less  good  than  if  the 
money  were  left  in  the  particular  business  or 
industry. 

♦    ♦    ♦> 

The  general  impression  is  that  while  a  man 
is   accumulating   he   is   engaged   in   a   purely 


The  Russell  Sage  Fortune  107 

selfish  pursuit,  and  that  when  he  stops  accumu- 
lating and  begins  distributing  he  is  engaged  in 
a  noBly  unselfish  pursuit. 

♦    ♦    ♦ 

In  a  profound  sense  the  reverse  is  true. 

The  term  '  ^  selfish ' '  is  much  abused.  It 
suffers  a  largely  undeserved  odium. 

In  a  fine  sense  everything  we  do  that  is  worth 
doing  is  done  from  purely  selfish  motives. 

AMien  we  start  out  to  do  things  iwofessedly 
for  the  benefit  of  others,  we  usually  make  a 
failure  unless  at  the  same  time  we  gratify  our- 
selves in  a  high  degree,  and  the  greater  the 
benefit  toothers — the  more  seemingly  unselfish 
our  conduct  —  the  more  noble  the  self-gratifica- 
tion ;  if  not  then  there  is  something  wrong  with 
our  conduct. 

The  most  unselfish  act  the  mind  of  man  could 
devise  would  be  at  the  same  time  the  most 
purely  selfish. 

*!*     *I*     *S* 

The  very  foundation  of  faith,  hope,  charity, 
love,  is  selfishness  —  interest  in  the  gratifica- 
tion, the  development,  the  future,  of  one 's  own 
self. 


108  Property 

The  familiar  test  of  everyday  life  is  whether 
a  man  in  what  he  does  thinks  first  of  himself 
and  secondly  or  remotely  of  others ;  or  whether 
he  forgets  himself  in  his  efforts  to  do  things 
that  benefit  others. 

Judged  by  these  tests  it  is  quite  apparent  a 
man  not  only  may,  but  usually  does,  forget 
himself  more  when  he  is  absorbed  in  his  work 
of  building  np  a  business  or  industry;  often 
forgets  himself  to  the  undermining  of  his 
health  and  the  sacrifice  of  his  life. 

"When  it  comes  to  giving  away  his  money  a 
man  rarely  forgets  himself.  Few  men  sacrifice 
either  their  lives  or  their  comfort  in  the  service 
of  charity  or  philanthropy. 

So  far  from  forgetting  themselves  men  gen- 
erally court  publicity — love  to  see  their  names 
in  print  and  on  buildings  and  monuments — the 
really  selfish — in  an  objectionable  sense  — 
period  of  their  lives  begins. 


"When  a  man  begins  to  spend  his  fortune  the 
community  is  vitally  interested  in  the  question : 
Is  he  spending  or  giving  ivisely  or  foolishly, 


The  Russell  Sage  Fortune  109 

not  from  liis  individual  point  of  view,  but  from 
the  communitj^'s  ? 


•I*    ♦>    ♦> 


The  accumulation  of  wealth  is  one  thing,  its 
consumption  is  quite  diiferent. 

As  a  factor  in  accumulating,  a  man  may  be 
a  most  valuable  citizen.  As  a  director  of  dis- 
tribution and  consumption  he  maj^  be  a  costly 
failure. 

During  the  better  part  of  his  life  he  may  be 
productively  engaged  in  adding  to  the  total 
wealth  of  the  community,  as  well  as  in  increas- 
ing his  o'WTi  fortune. 

During  the  latter  portion  of  his  life  he  may 
be  destructively  engaged  in  withdrawing  his 
fortune  from  the  productive  wealth  of  the  com- 
munity and  using  that  fortune  in  ways  that  do 
the  community  little  or  no  good. 

On  the  other  hand  he  may  be  constructively 
engaged  in  performing  an  invaluable  service 
in  devoting  his  fortune  to  works  and  objects  of 
practical,  scientific,  aesthetic  value  which  would 
not  be  created  or  encouraged  were  it  not  for 
his  taste,  his  foresight,  his  imagination,  his 


110  Pro  pert  7j 

ambition  to  do  something  of  great  and  lasting 

good. 

♦  ♦    ♦ 

The  value  of  the  rich  man  to  the  community 
may  be  twofold; 

1,  As  a  producer  and  an  accumulator. 

2.  As  a  distributor. 

^  As  a  producer  he  is  so  valuable  an  economic 
factor  that  every  community  that  has  attained 
any  degree  of  advancement  has  found  it  a 
good,  practical,  business  proposition  to  permit 
men  to  retain  for  themselves  large  control  over 
what  they  produce  as  an  incentive  to  work 
harder. 

A  man  may  call  the  wealth  he  is  producing 
''his    own."      The    community    instinctively 
knows  that  both  he  and  his  wealth  belong  to 
ji  the  community. 

♦  ♦    ♦ 

As  a  distributor  of  his  wealth  the  rich  man 
may  prove  of  even  greater  value  to  the  com- 
munity than  as  a  producer. 

As  a  producer  he  may  be  simply  one  of 
tliousands  equally  industrious  and  equally 
efficient. 


Tlie  Fiissell  Sage  Fortune  ill 

As  a  distributor  he  may  display  both  genius 
and  imagination. 

He  may  do  things  for  the  public  that  the  pub- 
lic would  not  do  for  itself  for  generations. 

He  may  endow  educational  institutions, 
establish  scientific  research  bodies,  build  art 
galleries,  museums,  libraries;  he  may  support 
orchestras,  theaters,  enrich  hospitals  —  all  with 
the  same  executive  ability  that  marked  the 
accumulation  of  his  wealth. 

And  all  these  things  he  may  do  long  before 
any  city  or  state  would  do  them,  and  do  them 
incomparably  more  brilliantly  and  efficiently. 

♦  ♦>    ♦ 

In  the  matter  of  investment  and  reinvestment 
the  individual  performs  an  economic  service 
that  cannot  be  done  as  well  by  public  bodies, 
chiefly  for  the  reason  the  individual  delights  in 
taking  rishs  no  public  body  is  permitted  to  take. 

♦  ♦    ♦ 

The  speculative  element  is  strong  in  man. 
The  sure  thing  does  not  appeal  to  the  man  of 
imagination.  The  love  of  danger,  of  risk,  is 
deeply  implanted  in  human  nature. 

Investing  one's  money  in  safe  **  gilt-edged  '* 


il2  Property 

bonds  is  a  cold-blooded  proposition  that  arouses 
no  large  degree  of  enthusiasm.  Accumulating 
wealth  in  that  fashion  is  a  deadly  proposition ; 
it  withers  the  soul.  The  man  who  does  it  is  a 
valuable  economic  factor,  but  he  is  like  a  timid 
banker  who  loans  only  on  gilt-edged  collateral 
—  of  no  use  when  it  comes  to  financing  some 
business  or  enterprise  the  outcome  of  which  is 
doubtful,  but  which,  if  successful,  will  be  of 
great  benefit  to  the  community.  The  great 
banker  takes  chances  on  the  personality  of  his 
borrower,  on  the  human  equation. 

The  great  rich  man  in  reinvesting  his  money 
instinctively  loves  to  take  chances  not  only  on 
/  men  but  on  the  future  of  the  country;  he  takes 
long  chances  in  the  construction  of  railways 
into  uninhabited  territory  because  he  believes 
the  people  v/ill  follow  and  sojne  day  the  roads 
will  pay;  and  if  he  never  gets  his  money  back 
he  will  have  had  the  satisfaction  of  attempting 
a  big  thing  for  the  country. 

lie  builds  waterworks,  gasworks,  electric- 
light  and  power  plants,  street-car  lines,  long 
before  the  to^\^ls  would  build  them.  He  puts 
his  money   into   them  freely,   recklessly.     In 


The  Biissell  Sage  Fortune         113 

endeavoring  to  get  his  money  out,  to  make  a 
profit,  the  companies  he  organizes  may  do 
things  that  exasperate  the  public,  but  it  must 
never  be  forgotten  that  nearly  all  of  these  pub- 
lic works  are  started  by  men  who  would  have 
accumulated  wealth  faster  by  investing  in  surer 
things ! 

Because  here  and  there  unprincipled  men 
make  millions  out  of  public  enterprises  by 
methods  that  are  corrupt  and  criminal  does  not 
alter  the  fact  that  individual  initiative  is  back 
of  practically  every  great  work,  big  and  little. 

Individual  initiative  built  the  Suez  Canal; 
individual  initiative  started  the  Panama  Canal. 

Into  these  and  other  public  enterprises  rich 
men  and  poor  men  pour  their  savings  like 
water  —  why  ? 

Because  the  investments  are  safe  ?  Not  at 
all.  Rather  because  they  are  unsafe,  because 
there  is  a  vague  promise  of  large  profits  in 
return  for  the  great  risks. 

Appeal  to  the  rich  man — to  any  man,  for 
that  matter  —  through  his  imagination  and  he 
is  the  most  gullible  person  on  earth. 

Whether  it  is  in  founding  an  orchestra,  erect- 


114  Property 

ing  a  library,  establishing  an  art  museum,  or 
building  a  railroad,  the  enthusiasm  that  enables 
him  to  carry  the  work  to  completion  depends 
upon  the  streng-th  of  the  appeal  to  his  imagi- 
nation. 

Without  knowing  it  many  of  our  rich  men 
after  working  hard  for  years  to  accumulate 
their  wealth  turn  poets  and  dreamers  in  spend- 
ing it,  and  because  they  are  poets  and  dreamers 
they  inspire  others,  even  carry  the  entire  pub- 
lic with  them,  often  to  the  attempting  of  some- 
thing beyond  the  strength  of  both  themselves 
and  the  public.  Just  as  De  Lesseps,  the  poet 
and  dreamer,  rather  than  De  Lesseps,  the 
engineer,  carried  the  French  public  off  its  feet 
in  the  disastrous  attempt  to  build  the  Panama 
Canal. 

A  rich  man  who  has  gained  his  wealth  by 
corruption  and  who  is  unscrupulous  in  his 
methods  may  also  be  a  poet  and  a  dreamer  in 
his  enterprises;  he  may  spend  his  wealth  in 
ways  that  almost  make  the  public  forget  and 
forgive  the  manner  of  its  accumulation. 

The  facts  and  arguments,  pro  and  con,  con- 
tained in  this  chapter  indicate  one  conclusion 


The  Russell  Sage  Fortune  115 

which  should  be  more  clearly  outlined,  and  that 
is; 

It  is  the  spending  of  a  fortune  that  calls  for  \ 
supervision. 

A  fortune  is  accumulated  by  investing  and 
reinvesting,  by  keeping  it  at  all  times  produc- 
tively employed  in  the  hands  of  others.  The 
man  who  ' '  owns  ' '  the  fortune  may  confine  his 
activities  to  a  small  desk  in  a  small  office.  As 
the  years  go  by  the  pieces  of  paper  in  his 
safety-vault  box  increase  in  number.  As  a  mat- 
ter of  fact  he  does  not  control  or  in  any  way 
attempt  to  interfere  with  the  way  the  proper- 
ties represented  by  those  pieces  of  paper  are 
used,  the  men  running  the  properties  probably 
do  not  know  of  his  existence. 

So  long  as  he  lives  the  life  of  a  careful  and 
shrewd  investor  the  community  is  beyond  ques- 
tion a  gainer  by  his  judgment. 

But  when  at  seventy  or  eighty,  or  by  will,  he 
takes  it  into  his  head  to  realize  on  his  pieces  of  ! 
paper  and  spend  his  fortune,  the  community  j 
should  become  immediately  and  vitally  inter- 
ested. 

And  possibly  this  interest  should  extend  to 


116  Property 

some  sort  of  supervision  of  the  transfer  of 
millions  from  unquestionably  productive  uses 
to  uses  that  may  be  either  far  more  or  far  less 
productive. 

'  In  other  words  should  an  old  man  be  per- 
mitted to  spend  ''  his  "  fortune  capriciously,  or 
take  it  to  a  foreign  country  —  in  short  to  do 
''  as  he  pleases  "  with  it  I 

The  fortune  while  nominally  and  legally 
**  his  "is  so  fundamentally  the  property  of  the 
community  where  it  is  productively  employed 
that  the  ' '  right ' '  of  the  individual  to  do  what 
he  wills  with  it,  regardless  of  consequences,  is 
a  "  right  "  that  calls  for  consideration  and  pos- 
sibly some  curtailment  of  a  supervisory  char- 
actor —  curtailment  that  will  permit  a  wide 
play  to  the  individual  imagination,  insight,  and 
foresight,  but  at  the  same  time  secure  the  com- 
munity against  the  waste  that  so  often  attends 
mere  giving — indiscriminate  giving. 

Perhaps  the  supervision  cannot  be  exercised 
without  depriving  the  community  of  precisely 
those  benefits  that  result  from  the  individual's 
impulsive  and  arbitrary  indulgence  of  his 
dreams,  his  aspirations,  his  beliefs,  and  in  the 


Tlie  Russell  Sage  Fortune         117 

long  run  it  may  be  better  for  the  community  to 
go  along  as  it  does  and  take  the  chance  referred 
to,  but  the  subject  of  supervision  is  suggested 
— not  advocated  —  because  it  must  occur  to 
every  man  who  gives  the  matter  serious 
thousrht. 


VI 

THE  MARSHALL  FIELD  FORTUIvrE 

The  late  Marshall  Field  of  Chicago  started 
life  in  a  New  England  town  "with  nothing. 

He  became  the  greatest  dry-goods  merchant 
the  world  has  known,  and  died  leaving  a  for- 
tune officially  inventoried  as  follows: 

Personal  property $58,473,292.55 

Real  estate 24,985,739.83 

Total $83,459,032.38 

The  real  estate  consisted  of: 

His  home  on  Prairie  Avenue  in  the  city  of 
Chicago,  occupying  a  frontage  of  163  feet  and 
improved  with  a  three-story  dwelling-house,  so 
quiet  and  modest  in  appearance  the  entire  place 
is  hardly  distinguishable  from  that  of  hun- 
dreds of  men  of  moderate  means. 

Lots  and  parcels  of  land  in  many  different 
states,  some  improved,  others  unimproved; 
also  some  farm  lands,  and  some  contracts  for 
the  purchase  of  real  estate. 

With  the  exception  of  his  home  all  these 

118 


Tli6  Marshall  Field  Fortune        119 

items  of  real  estate,  amounting  to  twenty-five 
millions  of  dollars,  were  investments  for  profit, 
investments  made  with  the  expectation  that 
advancing  values  in  the  different  neighborhoods 
would  yield  him  a  profit,  even  though  he  did 
nothing  but  hold  the  pieces  and  pay  taxes  on 
them. 

This  sort  of  investment  is  fundamentally 
different  from  investments  in  productive  enter- 
prises, and  stress  is  here  laid  upon  the  real 
estate  part  of  the  Field  fortune  because  for- 
tunes in  real  estate  will  be  discussed  farther  on. 

For  the  moment  we  are  interested  in  the  per- 
sonal property  he  accumulated. 

The  official  inventory  showed  only  $58,473,- 
292.55,  but  in  this  inventory  all  stocks  and 
bonds  were  taken  at  par — at  face  value. 

Stocks  that  had  a  market  —  an  actual — value 
of  $200  or  $300  per  share  were  inventoried  at 
their  par  value  of  $100.  ^ 


*  It  must  be  understood  there  was  nothing  illegal  or  im- 
proper in  so  doing.  In  making  an  inventory  it  is  quite 
correct  to  list  stocks,  bonds,  notes,  etc.,  and  all  pieces  of 
property  by  their  description.  The  official  appraisers  take 
the  inventory  and  appraise  the  actual  value  regardless  of 
the  par  or  nominal  value. 


/ 


120  Property 

For  instance  he  held  34,000  shares  of  the 
stock  of  Marshall  Field  &  Co.  —  the  greatest 
mercantile  firm  in  the  world — and  these  were 
taken  in  the  inventory  at  their  par,  $100  per 
share,  a  nominal  total  for  his  controlling  inter- 
est in  that  great  business,  of  only  $3,400,000. 

No  one  can  estimate  the  actual  value  of  his 
interest  in  that  very  profitable  business,  but  it 
would  be  nearer  $50,000,000  than  $3,000,000.^ 
His  fortune  was  probably  not  less  than  $150,- 
000,000. 

♦    ♦    ♦ 

In  addition  to  his  interest  in  Marshall  Field 
&  Co.,  Mr.  Field  left  the  following  items : 

Money  in  box,  $4,134.90. 

Special  attention  is  directed  to  this  item  for 
—  aside  from  his  home  and  personal  belong- 
ings—  it  represents  practically  his  entire 
ivealtJi  in  possession.  ^ 

He  had  less  than  five  thousand  dollars  in  cash 


'  The  par  value  of  Mr.  Carnegie's  stock  in  the  Carnegie 
Steel  Company  was  $100  per  share.  He  received  for  it 
*1,500  per  share. 

'  Even  then  only  in  so  far  as  the  money  was  in  gold  — 
probably  not  a  dollar.  For  paper  money  is  simply 
promises  to  pay,  notes. 


The  Marshall  Field  Fortune        121 

idle.  And  the  astonishing  thing  is  that  he  had 
so  much.  He  was  not  a  man  to  keep  a  penny 
idle.  Sudden  siclmess  and  death  (from  pneu- 
monia, away  from  home)  probably  caught  him 
before  this  cash  could  be  deposited  in  bank  or 
invested. 

Money  on  deposit  in  various  banks  —  $4,295,- 
378.76. 

This  represents  the  current  accumulation  of 
profits  and  interest  from  all  his  investments. 
Naturally  as  money  poured  in  from  his  busi- 
ness and  from  various  investments  he  would 
deposit  it  in  different  banks,  and  invest  it  as 
fast  as  he  could  in  many  different  ways  —  as 
sho^^^l  by  the  inventory  of  his  estate. 

Money  in  bank  is  not  idle.  As  already  noted 
a  bank  is  but  a  mechanism  for  keeping  the 
monej''  of  individuals  invested  productively.  It 
takes  your  money  and  mine,  keeps  a  small  per- 
centage on  hand  to  honor  our  checks,  and  loans 
the  balance  to  mechanics,  farmers,  manufac- 
turers, business  men — to  anybody  who  needs 
money  and  whose  credit  or  security  is  good. 

Deposited  in  bank  Marshall  Field's  $4,000,- 
000  were  placed  where  the  community  could  use 


122  Property 

them  by  paying  to  the  banks  the  current  rate 
of  interest,  which  interest  the  banks  would 
divide  with  Marshall  Field  by  allowing  him 
probably  two  per  cent  on  his  daily  balance. 

Inasmuch  as  he  could  get  only  two  per  cent 
on  his  daily  bank  balances  the  incentive  was 
always  strong  to  get  the  money  out  of  the 
banks  and  into  stocks  and  bonds  or  other 
investments  that  would  jdeld  more,  and  that  is 
what  he  did. 

He  not  only  ran — personally  supervised  and 
huilt  up  —  his  great  mercantile  business  until 
it  was  literally  one  of  the  commercial  wonders 
of  this  great  commercial  country,  but  he  also 
exercised  his  keen  judgment  in  investing  his 
profits. 

He  would  pour  all  he  could  back  into  his  own 
business,  then  invest  the  surplus  wherever  it 
seemed  most  needed. 

♦    ♦    ♦ 

The  official  inventory  showed  the  following 
items : 

Stocks  of  23  railroads $8,99.3.600.00 

Stocks  in  5  street  railroads 194,700.00 

Stocks  in  17  banks 781,760.00 


Tlie  Marshall  Field  Fortune       i^^ 

Stocks  in  27  industrial  and  mis- 
cellaneous companies 7,001,950.00 

Bonds  of  30  railroads 5,659,500.00 

Bonds  of  9  industrial  and  mis- 
cellaneous companies 1,903,500.00 

Subscriptions  to  various  enter- 
prises   1,835,470.00 

Notes    of   industrial   companies 

and  others 2,207,971.26 

Money    loaned    Marshall    Field 

&  Co 8,486,607.23 

It  is  the  character  of  a  man's  investments, 
not  their  amount,  which  determines  his 
economic  value  to  the  community. 

Whether  the  market  value  of  any  particular 
stock  is  above  or  below  par  does  not  alter  the 
fact  that  the  investment  was  made  for  pro- 
ductive purposes. 

The  market  value  —  i.  e.  the  price  —  of  the 
stock,  on  any  given  day  is  an  index  of  the 
opinion  of  the  market  regarding  the  produc- 
tivity—  the  earning  power  —  of  the  industry, 
and  that  may  be  large  one  year  and  small  the 
next,  or  it  may  fail  entirely,  thereby  discredit- 
ing the  judgment  of  the  men  who  invested  in  it. 

At  the  time  of  his  death  the  great  majority 
of  Mr.  Field's  stocks  and  bonds  were  above 
par,  and  worth  more  than  when  he  invested, 


l£4  Property 

thereby  demonstrating  his  economic  value  as  a 
factor  in  wisely  distributing  his  (the  com- 
munity's) wealth  where  it  was  most  needed 
for  productive  purposes. 

♦    ♦    ♦ 

The  net  result  to  the  community  of  his  life, 
from  a  purely  economic  view,  was: 

1,  The  devotion  of  exceptional  executive 
genius  to  the  development  and  organization  of 
a  great  mercantile  business,  which  not  only 
served  the  public  well,  but  also  served  as 
a  model  for  similar  establishments  the  world 
over.  What  he  did  for  the  country  in 
advancing  the  science  —  the  art  if  you  please 
—  of  merchandising  can  hardly  be  overesti- 
mated in  dollars  and  cents.  So  perfect  and 
advanced  in  methods  was  his  organization  that 
in  effect  it  was  akin  to  a  revolutionizing 
invention. 

The  great,  the  enterprising,  the  original 
business  man,  manufacturer,  lawyer,  doctor,  is 
as  much  an  inventor  as  the  man  who  takes  out 
patents  on  his  ideas. 

In  fact  the  successful  man  in  any  walk  of 
life  must  be  an  originator,  an  inventor,  through- 


Til 6  Marshall  Field  Fortune       125 

out  his  active  career,  and  his  success  is  meas- 
ured by  his  originality,  his  daring,  his  inno- 
vations. 

2.  In  addition  to  his  executive  ability  as  a 
great  merchant  the  community  had  the  benefit 
of  Mr.  Field's  keenness  of  judgment  in  invest- 
ing his  earnings.  He  not  only  invested  his 
money  in  railroads,  banks,  industries,  etc.,  but 
he  gave  of  his  time  and  energies;  he  served 
as  director  with  many  companies,  and  his  serv- 
ice was  never  perfunctory.  He  was  not  a 
' '  straw  director. ' ' 

♦    ♦    * 

Now,  what  did  all  this  cost  the  community 
up  to  the  time  of  his  death  ? 

The  comparatively  small  amount  he  spent  on 
himself.  His  home  was  very  unpretentious, 
and  he  lived  so  simply  and  inexpensively  it  was 
a  matter  of  comment  by  those  who  knew  him 
best. 

Look  at  it  this  way,  take  every  dollar  he 
spent  on  himself  and  for  his  family,  double 
that  amount,  would  not  the  city  of  Chicago  say 
the  total  was  a  small  amount  to  pay  for  the 


126  Property 

development  of  the  one  mercantile  enterprise, 
Marshall  Field  &  Co.T 

Is  it  conceivable  that  at  so  low  a  cost  any 
commission,  or  any  socialistic  community  could 
develop  so  successful  and  economically  valu- 
able an  establishment  ? 

The  growth  of  this  great  business  from  small 
beginnings  is  one  proof  of  the  economic  value 
of  the  liberal  recognition  of  personal  property 
rights. 

Without  such  recognition  as  an  incentive  no 
man  would  work  all  his  life  accumulating.  Why 
should  he  accumulate  if  his  control,  his  author- 
ity over  the  accumulations  are  denied  1  His 
efforts  would  naturally  and  inevitably  cease  at 
the  point  where  his  control  ceased.  He  would 
consume  w^hat  he  earned  from  year  to  year. 
He  would  not  deny  himself  a  single  luxury  for 
the  sake  of  dying  and  leaving  a  fortune  to  the 
state. 

His  fortune  may  go  to  the  state  if  he  leaves 
no  relatives  and  no  will,  but  that  possibility 
does  not  trouble  him  for  every  man  expects  to 
leave  at  least  a  will,  and  whether  he  does  or 
not  he  labors  on  that  assumption. 


The  Marshall  Field  Fortune        127 

The  item  in  the  inventory :  ' '  Syndicate  sub- 
scriptions—  $1,835,470.00  "  leads  to  an  explana- 
tion how  men  both  rich  and  poor  invest  their 
profits,  incomes  and  savings  in  productive 
enterprises. 

Take  an  enterprise  already  estahlished  which 
needs  money  for  further  development.  It  may 
be  a  railroad,  a  coal-mining  company,  a  lumber 
company,  a  packing-house,  or  any  other  in- 
dustry. 

An  estimate  is  made  of  the  amount  of  money 
needed  and  the  company  proposes  to  issue 
stocks,  or  bonds,  or  both  for  the  amount. 

On  first  impression  the  simplest  and  easiest 
way  would  seem  to  be  to  offer  the  securities  to 
the  public  generally,  but  up  to  the  present  time 
that  has  not  been  found  the  practical  and 
expeditious  way  in  this  country,  for  the  reason 
the  public  generally  has  no  knowledge  of  the 
particular  industry  and  no  means  of  forming 
an  estimate  of  the  value  of  the  securities 
offered,  and  there  would  be  few  or  no  sub- 
scribers. 

Sometimes  issues  of  bonds  or  new  stock  are 
quickly  subscribed  by  stockholders  of  the  com- 


128  Property 

pany  because  they  know  the  earning  power  of 
the  company  and  have  confidence  in  its  future, 
but  the  public  can  know  very  little  about  a  new 
enterprise. 

Hence  it  is  common  practice  for  the  men 
engaged  in  an  industry  that  needs  more  money, 
or  who  are  organizing  a  new  enterprise,  such 
as  a  street  railway,  waterworks,  electric-light 
company,  etc.,  etc.,  to  formulate  their  plans  and 
lay  them  before  bankers  and  other  exj)erts. 

If  the  bankers  and  experts  are  favorably 
impressed  with  the  plans,  they  organize  a 
syndicate  to  subscribe  for  all  of  the  new  securi- 
ties, and  each  member  of  the  syndicate,  whether 
a  bank  or  an  individual,  signs  for  the  amount 
opposite  his  name  —  just  as  Mr.  Field  sub- 
scribed for  certain  amounts  in  the  syndicates 
referred  to.  This  insures  the  furnishing  of  the 
money. 

After  the  sjmdicate  subscription  is  filled  the 
next  step  is  to  offer  the  securities  to  the  public. 
If  the  public,  as  often  happens,  subscribes  for 
the  entire  issue  then  the  syndicate  members 
get  no  securities  at  all  on  their  syndicate 
subscriptions. 


The  Marshall  Field  Fortune        129 

But  if  the  public,  as  also  often  happens,  takes 
only  a  part  of  the  securities,  then  the  unsold 
balance  must  be  taken  by  the  s^nidicate  mem- 
bers, distributed  in  proportion  to  their  sub- 
scriptions. 

A  syndicate  agreement  is,  therefore,  a  guar- 
anty  to  the  new  —  or  old  —  enterprise  that  the 
money  it  needs  will  surely  be  forthcoming  at  a 
given  date  whether  or  not  the  public  takes  any 
stock  or  bonds. 

This  guaranty  is  of  value  because  it  enables 
the  men  engaged  in  the  industry  to  go  ahead 
with  their  plans  without  waiting  the  slow  and 
uncertain  outcome  of  a  popular  subscription. 

The  syndicate  has  —  or  rather  should  have  — 
another  value;  it  signifies  to  the  public  that 
experts  have  looked  into  the  enterprise  and 
reported  favorably,  otherwise  bankers  and  keen 
business  men  would  not  take  the  risk  of  guar- 
anteeing the  new  capital. 

For  this  service  —  this  insurance  —  the  syn- 
dicate usually  receives  a  commission.  If  the 
public  takes  cdl  the  new  securities  then  the 
members  of  the  syndicate  are  relieved  of  their 
guaranty,  they  get  no  stocks  or  bonds,  but  they 


ISO  Property 

get   as  compensation  the   commission   agreed 
upon. 

The  fact  that  many  syndicate  transactions 
and  commissions  have  been  of  a  character  to 
call  for  condemnation,  does  not  alter  the  truth 
that  generally  speaking  the  syndicate  method 
of  raising  new  capital  is  not  only  useful,  but 
seemingly  necessary  in  many  cases. 

<3»     <j»     «j» 

Another  and  very  common  way  of  securing 
new  capital  is  for  the  individual  or  corporation 
to  sell  its  bonds  direct  to  one  or  more  banks  or 
trust  companies,  which,  in  turn,  sell  them  to 
their  depositors  and  customers. 

Banks  and  trust  companies  do  not  buy  bonds 
with  the  expectation  of  holding  them,  but  with 
the  expectation  of  selling  them  at  a  profit,  so 
as  to  be  able  to  repeat  the  transaction. 

It  is  plain  that  it  makes  little  difference  to 
either  the  company  issuing  the  bonds  or  to  the 
public  that  ultimately  gets  them  for  invest- 
ment, whether  a  syndicate  subscribes  for  them 
or  a  bank  buys  them.  As  a  matter  of  fair  cal- 
culation the  profit  of  the  bank  that  buys  out- 
right ought  to  be  a  little  higher  than  that  of  the 


The  Marshall  Field  Fortune        1^1 

sjmdicate  which  only  guarantees,  and  in  the 
end  may  not  be  called  upon  to  take  any. 

The   syndicate   method   of   securing  capital 
ought  to  be  less  expensive. 
♦    ♦•♦    »> 

From  the  foregoing  explanation  it  is  plain 
that  the  signing  of  a  sj-ndicate  subscription 
involves  no  immediate  investment  or  expendi- 
ture. 

No  member  of  a  syndicate  invests  or  puts  up 
a  dollar  until  called  upon  by  the  sj^dicate  man- 
agers, and  if  the  public  takes  the  entire  issue 
of  securities  the  syndicate  members  receive 
their  commission  and  are  released  without  the 
investment  of  a  penny. 

Herein  is  where  men  of  wealth  —  like  banks 
—  perform  a  valuable  economic  service. 

Their  credit  is  such  that  their  r.iere  agree- 
ment to  do  certain  things  is  accepted  and  serves 
the  same  purpose  as  if  they  actually  deposited 
gold  with  their  subscriptions. 

Suppose  it  were  necessary  for  S3mdicate  sub- 
scribers to  put  up  in  gold  the  full  amounts  of 
their  subscriptions,  that  would  mean  the  with- 
dravjvn,g  of  so  much  money  from  productive 


1S2  Propertji 

uses,  and  holding  it  idle  in  vaults  until  the 
transaction  was  brought  to  a  conclusion.  It 
would  make  the  raising  of  new  capital  more 
difficult  and  therefore  more  expensive.  The 
result  would  be  a  checking  of  industrial  and 
commercial  development,  a  positive  burden  on 
the  prosperity  of  the  country. 

♦    *    ♦ 

The  fact  that  there  are  banks,  trust  compa- 
nies, insurance  companies,  etc.,  and  also  large 
numbers  of  individuals  whose  credit  is  such 
that  their  mere  agreement  takes  the  place  and 
for  a  time  performs  the  work  of  actual  wealth, 
means  much  in  the  economic  development  of 
the  community.  It  enables  villages,  cities, 
states,  as  well  as  individuals  and  corporations 
to  go  ahead  immediately  with  i)ublic  works  and 
improvements  as  if  the  actual  gold  dollars 
were  tied  up  idle  in  the  treasury,  because  every- 
body knows  that  from  time  to  time  as  th(-- 
money  is  needed  it  will  be  forthcoming,  and 
until  it  is  needed  it  will  remain  productively 
employed  in  other  ways. 


The  Marshall  Field  Fortune       133 


The  day  laborer  who  has  a  hundred  dollars 
in  a  bank  is  an  essential  factor  in  tliis  mighty 
credit  machinery. 

He,  too,  participates  in  s^Tidicates.  He  does 
not  sign  the  agreement  liimself,  but  it  is  his 
deposit  together  with  others  that  enables  the 
bank  to  agree  to  take  bonds. 

A  bank  and  a  rich  man  perform  very  much 
the  same  economic  functions.  Both  are  rich, 
both  have  credit. 

The  rich  man  accumulates  his  wealth  by 
individual  savings  and  investments. 

The  resources  of  the  bank  are  made  up 
principally  of  deposits,  secondly  of  profits. 

Through  the  operation  of  the  bank  wherein 
he  has  his  small  deposit  the  poor  man  is  a 
capitalist,  a  bondholder,  a  sjmdicate  member, 
and  so  on.  He  is  doing  his  share  toward  the 
development  of  the  country,  he  is  keeping  his 
surplus  earnings  productively  employed. 
♦    ♦    ♦ 

The  law  governing  postal  savings  —  deposits 
in  post  offices — wisely  provides  that  the  post 
offices  shall  deposit  the  money  in  banks.  "\Miy? 
Because   while   it   is    easy   enough   for   post- 


134  Property 

masters  to  receive  money  it  is  not  practicable 
for  them  to  loan  and  invest  it. 

The  ivise  loaning  and  investment  of  money 
requires  expert  knowledge  and  judgment  of  the 
highest  character,  therefore  the  government  re- 
ceives the  money  of  the  people  but  iimnediately 
deposits  it  in  banks  so  that  it  may  be  loaned, 
invested,  and  kept  productively  employed. 
♦    <>    *j 

On  first  impression  it  may  not  be  entirely 
clear  to  the  casual  reader  that  when  a  man  or 
a  bank  buys  stocks,  bonds,  notes,  mortgages, 
that  have  been  first  purchased  by  others  the 
money  is  invested  productively. 

True  the  farmer  who  gave  the  note  or  the 
company  that  issued  the  bonds  gets  no  more 
money  as  note  and  bonds  are  resold  and  change 
ow^nership  from  time  to  time;  the  economic 
effect  of  the  change  is  that  one  owner  of  the 
securities  takes  the  place  of  another  owner,  and 
the  money  the  seller  had  invested  is  released 
for  other  purposes;  he  may  invest  it  produc- 
tively or  waste  it,  that  is  a  new  transaction,  the 
investment  in  the  old  remains  the  same,  it  is 
represented  by  the  note  or  bond,  or  share  of 


The  Marshall  Field  Fortune       135 

stock   and   whoever   oa\tis   that   is   the   actual 
investor  in  that  particular  enterprise. 
»^    <{>    <^ 

All  his  life  Marshall  Field  did  three  things : 

He  worked  very  hard. 
He  spent  very  little  on  himself. 
He  invested  his  savings  and  income  as  rap- 
idly as  possible. 

He  was  a  very  efficient  human  machine  for 
the  production  of  wealth.  As  such  he  was  an 
exceedingly  valuable  member  of  society,  so 
valuable  that  any  socialistic  community  could 
afford  to  pay  him  for  his  services  a  salary 
much  larger  than  the  amount  he  annually  spent 
on  himself. 

But  it  will  be  urged  that,  conceding  his 
genius  as  a  merchant  and  his  value  to  society 
as  an  organizer,  the  fortune  he  made  was  out 
of  all  proportion  to  his  worth,  that  a  fortune 
of  one  hundred  and  fifty  millions  is  so  grossly 
excessive  as  to  demonstrate  on  its  face  that 
something  is  w^rong  with  the  machinery  of 
distribution. 


136 Property 

All  of  which  brings  us  back  to  where  we 
started,  namely  an  analysis  of  this  fortune  to 
ascertain  just  how  much  of  it  was  really  his 
when  he  died,  for  it  must  not  be  overlooked 
that  when  we  speak  of  the  death  of  a  rich  man 
we  always  say,  "  He  left  so  many  millions." 

*'Left"  them  where?  At  the  edge  of  the 
grave  ?    In  his  pocket-book  ? 

Why,  no. 

He  left  his  millions  exactly  v/here  they  had 
been  for  months  or  years,  in  the  hands  of 
others  who  are  using  them  productively. 

His  ownership  was  the  legal  right  to  draw 
from  his  business  and  investments  (a)  each 
year  his  entire  income  and  at  any  time,  (b)  the 
entire  principal,  and  (theoretically)  do  with 
both  income  and  principal  as  he  pleased. 

"When  he  died  he  left  ten  millions  to  the  Field 
Museum  in  Chicago  and  a  f  ev/  other  compara- 
tively small  bequests.  Almost  his  entire  for- 
tune he  tied  up  in  trust  for  many  years  for  his 
grandsons.  In  short  he  did  all  he  could  legally 
to  continue  his  fortune  in  the  same  productive 
enterprises.  He  did  not  propose  to  permit  his 
descendants,  relatives,  or  anyone  else  to  with- 


Tlie  Marshall  Field  Fortune        137 

draw  liis  fortune;  he  did  not  want  them  to  bo 
in  a  position  where  they  could  exercise  any 
actual  oivnership,  only  legal  rights  over  his 
investments. 

The  trust  he  created  by  will  prevents  his 
grandsons  from  inheriting  the  property  and 
exercising  any  real  control  over  the  business 
of  Marshall  Field  &  Co.  until  they  are  fifty 
years  of  age.  This  successful  attempt  to  "  tie 
up  "  property  so  shocked  the  legislature  of  the 
state  of  Illinois,  it  immediately  passed  a  law 
limiting  the  power  of  an  individual  to  create 
by  deed  or  will  a  trust  for  longer  than  the 
limited  period  named  in  the  statute.  Such  a 
law  may  be  sound,  but  not  for  the  reasons  com- 
monly urged  in  support  of  it.  A  very  good 
argument  could  be  made  in  favor  of  encourag- 
ing the  individual  to  *'  tie  up  ''  his  fortune  in 
the  productive  industries  in  which  it  is  em- 
ployed, and  curtail  the  power  of  his  heirs  to 
withdraw  it  and  spend  it. 

Press  and  public  thoughtlessly  applauded 
the  disposition  of  the  Sage  fortune  —  its  with- 
drawal from  productive  uses  and  devotion  to 
philanthropic;  they  equally  thoughtlessly  con- 


138  Property 

denmed  the  Field  will  which  kept  the  Field  for- 
tune productively  employed. 

As  said  in  passing  the  creation  of  long-time 
trusts  is  open  to  objections  from  an  entirely 
different  angle,  but  that  is  a  discussion  outside 
the  scope  of  this  book. 

♦    *    ♦ 

Socialists  and  communists  take  the  legal 
proposition  that  a  man  may  do  as  he  pleases 
with  his  own — which  proposition  as  a  matter 
of  fact  and  law  has  its  limitations- — and  they 
base  their  objections  to  private  ownership  of 
capital  upon  the  assumption  that  men  habit- 
ually exercise  that  supposed  right  and  actually 
withdraw  and  consume  what  the  law  says  be- 
longs to  them. 

If  this  were  true  the  world  would  not  be 
where  it  is,  but  somewhere  back  in  the  Bronze 
or  Stone  Age.  If  men  from  the  very  beginning 
had  not  been  in  the  habit  of  leaving  most  of 
what  they  produce  in  their  industries  little 
progress  would  have  been  made  in  wealth  or 
civilization,  and  the  more  a  man  produces,  the 
greater  his  genius  for  organization  and  produc- 
tion, the  more  he  invests  and  reinvests  his 


The  iMarshall  Field  Fortune        189 

earnings  —  the   smaller   and  smaller  the   per- 
centage he  spends  on  himself. 
♦    ♦    ♦ 

It  will  be  urged  that,  assuming  most  men  do 
leave  their  earnings  in  their  business,  and  let 
their  wealth  accumulate  for  the  most  part  on 
paper,  drawing  out  and  using  very  little,  the 
time  will  come  when  some  son,  or  relative,  ^Aill 
see  fit  to  exercise  his  legal  rights  and  spend 
his  income,  possibly  his  principal,  so  that  after "Vi 
all  he  proves  to  be  the  real  owner,  not  the 
public.  J' 

No  —  the  conclusion  does  not  follow. 

If  a  man  arbitrarily  shuts  down  and  wipes 
out  of  existence  the  business  he  owns,  destroy- 
ing everything  of  value  connected  with  it,  he 
would  thereby  demonstrate  his  real  ownership, 
but  in  so  demonstrating  his  legal  right  to  do  as 
he  pleased  with  his  own,  it  is  obvious,  he  would 
ipso  facto  destroy  the  right  itself,  since  the 
legal  right  has  no  existence  theoretically  or 
actually  save  in  connection  with  the  property 
being  destroyed,  as  that  disappears  the  right 
disappears. 

Furthermore,  long  before  he  would  succeed 


140  Property  

in  fully  demonstrating  liis  absolute  ow^iership 
the  public  vrould  intervene  either  on  its  own 
motion  or  at  the  request  of  relatives  and 
appoint  guardians  or  conservators  to  preserve 
the  property. 

Only  an  insane  man  would  set  out  to  demon- 
strate his  absolute  ownership  of  property  by 
destroying  it. 

♦    ♦    ♦ 

Ordinarily  the  demonstration  takes  one  of 
two  forms  —  sometimes  both: 

1.  The  improvident  son  or  relative  begins  to 
Y/ithdraw  the  income  and  principal  and  use  it 
in  luxurious  living,  spending  recklessly  and 
extravagantly  for  his  o%vn  enjojTnent.  The 
industry  of  business  may  be  cramped,  even 
crippled  as  capital  is  withdrawn,  it  may  even 
fail,  but  ordinarily  it  passes  into  the  hands  of 
others  and  continues. 

This  form  of  assertion  of  private  ownership 
is  the  most  obnoxious ;  it  is,  as  already  noted, 
the  form  that  does  so  much  to  bring  private 
property  into  disrepute ;  it  furnishes  the  social- 
ist and  the  communist  with  striking  illustra- 
tions for   arguments  that   are   fundamentally 


The  Marshall  Field  Fortune        1^1 

unsound.  And  it  is  this  form  of  assertion  of 
private  ownership  that  will  be  curbed  some  day 
without  disturbing  rights  that  are  incentives  to 
productive  effort  and  beneficial  to  the  com- 
munity' . 

2.  For  the  most  part  private  ownership  of 
capital  is  asserted  by  withdrawing  income  and 
principal  from  one  enterprise  and  investing  in 
another.  For  instance  instead  of  leaving  all 
its  earnings  in  the  dry-goods  business,  Mr. 
Field  would  take  a  large  share  of  his  income 
from  that  source  and  invest  it  in  other  enter- 
prises ;  if  he  bought  railroad  stocks  or  bonds  it 
meant  that  his  money  was  used  to  develop 
facilities  for  transportation,  etc. 
♦    4»    *> 

But  suppose  there  comes  a  time  when  some- 
one of  less  sagacity  withdraws  income  and 
principal  from  productive  enterprises  and  in- 
vests in  unproductive  —  the  community  is  a 
loser. 

"  The  community  would  not  have  done  that 
if  it  had  been  really  the  owner,"  someone 
urges. 

Possibly — yet  the  community  is  not  a  loser 


142  Property 

in  the  sense  it  is  when  the  money  is  wasted  in 
riotons  living.  An  entire  fortune  may  be  lost 
in  unproductive  enterprises,  in  sinking  oil  wells 
that  never  flow,  in  opening  mines  that  contain 
no  gold,  in  starting  factories  that  do  not  pay; 
the  individual  may  transfer  his  hundred  mil- 
lions to  others  in  these  different  ways,  and  the 
community  may  be  the  loser  to  the  extent  that 
labor  and  capital  are  consumed  in  ways  that 
^ield  no  return ;  but  it  may  be  a  gainer  to  the 
extent  the  vast  expenditure  teaches  certain  les- 
sons, demonstrates  the  uselessness  of  doing 
certain  things  in  certain  places  or  in  certain 
ways.  It  goes  without  saying  that  every  pro- 
gressive community — whether  socialistic  or 
individualistic  —  must  spend  vast  sums  in  ex- 
periments that  prove  unproductive,  in  develop- 
ing inventions  and  ideas  that  turn  out  worth- 
less, in  searching  for  iron,  oil,  coal,  in  places 
where  there  is  none;  in  starting  factories  in 
localities  where  they  will  not  succeed.  Not  to 
do  all  these  things  would  imply  the  prescience 
of  the  Almighty. 

As  it  is,  this  work  is  largely  done  by  men 
whose  incomes  are  so  large  they  are  willing  to 


The  Marshall  Field  Fortune       14)3 

take  chances.  The  socialistic  commimity  would 
have  to  make  the  same  experiments,  take  at 
least  some  of  the  same  chances,  or  stand  still. 
The  individual  is  a  much  better  and  more  reck- 
less gambler  with  Fortune  than  any  socialistic 
community  would  be,  hence  the  unparalleled 
exploitation  of,  the  earth,  and  production  of 
wealth,  under  private  ownership. 

The  fortune  a  man  accumulates  by  leaving 
all  his  earnings  in  enterprises  that  are  highly 
productive,  may  be  dissipated  in  a  generation 
by  attempts  —  and  wise  attempts  at  that  —  to 
open  up  new  oil  fields,  new  enterprises,  that  in 
the  end  prove  unproductive. 

It  is  not  infrequently  the  case  that  these  new 
investments  prove  unproductive  only  long 
enough  to  bankrupt  the  man  who  starts  them, 
but  after  his  millions  are  all  in  and  lost  to  him, 
tlie  enterprises  in  the  hands  of  others  and  with 
additional  capital  prove  highly  productive. 
Many  a  railroad  in  this  country  has  lost  every 
dollar  its  first  stockholders  put  in,  to  make, 
after  foreclosure  and  reorganization,  fortunes 
for  its  second  lot  of  owners. 


144  Property 

The  wealth  of  the  United  States  is  estimated 

at  one  hundred  and  thirty  billions  of  dollars, 

most  of  which  is  *'  private  property." 

I         The  annual  increase  is  over  two  billions  — 

■^      \     $2,000,000,000.    That  is  our  net  annual  income 

\   — the  sum  total  of  the  net  incomes  of  all  in- 

\  dividuals. 

That  is  the  amount  the  nation  is  laying  up 
annually  after  all  waste,  all  foolish  and  reck- 
less consumption  of  wealth  is  taken  care  of. 
It  is  derived  from  private  enterprises  —  from 
the  farms,  the  mines,  the  factories,  the  rail- 
roads, of  the  country ;  nominally  it  is  nearly  all 
privately  owned,  in  reality  it  is  as  much 
engaged  in  the  service  of  the  community  as  if 
the  legal  title  were  in  the  community,  and  the 
service  is  far  more  efficient,  far  more  progres- 
sive, far  more  venturesome — because  the  in- 
centive to  individual  initiative  and  effort  is 
1 '  ?  greater — than  if  all  capital  were  actually  con- 
trolled by  public  employees. 
\  In  1910  there  were  210,262  manufacturing 

\         establishments  turning  out  over  fourteen  bil- 
\       lions  of  dollars  worth  of  products. 

These  establishments  are  privately  owned, 


The  Marshall  Field  Fortune       145 

and  theoretically  the  o\\Tiers  have  the  legal 
right  to  shut  down  every  one  and  stop  in  a  day 
the  production  of  the  fourteen  billions  of  goods, 
but  they  never  have  done  that  and  never  will; 
they  never  have  exercised  and  never  will  exer- 
cise their  legal  right ;  if  they  attempted  to  the 
community  would  instantly  intervene  and  deny 
the  right,  just  as  it  now  intervenes  in  coal 
strikes  and  denies  the  right  of  coal  companies 
to  do  as  they  please,  just  as  in  the  near  future 
the  community  will  intervene  in  every  threat- 
ened strike  and  deny  the  right  of  both  em- 
ployers and  employees  to  do  as  they  please. 


There  are  over  six  millions  of  farms  in  the 
United  States  with  a  value  —  land  and  build- 
ings —  of  over  thirty-five  billions  of  dollars. 

All  this  is  nominally  owned  by  individuals, 
and  legally  each  man  is  commxOnly  supposed  to 
have  the  right  to  destroy  his  buildings  and  let 
his  farm  go  to  waste,  but  that  is  an  idle  asser- 
tion of  a  *'  right  "  that  does  not  exist  except  in 
the  imagination.  It  is  a  **  right"  to  juggle 
with  in  socialistic  and  communistic  denuncia- 


146  Property 

^— ^^^"^^^^    ■■■  ■         I       ■■       ^^»M—  I^IM  1      ^^-^^^—^—■——■1  ■■■III    IM     ■■■     I     i*      ■    III  ■ 

tion,  but  it  is  a  '  *  thing  of  straw ' '  easily  bat- 
tered to  cliaff. 

One  generation  of  farmers  succeeds  another, 
and  each  works,  not  to  spend  on  itself,  but  to 
accumulate  for  the  succeeding. 

Here  and  there  a  farmer,  like  a  manufac- 
turer, or  a  merchant,  may  assert  his  private 
ownership,  his  **  right  to  do  as  he  pleases  with 
his  OAMi,"  and  spend  recklessly  until  penniless, 
but  these  exceptions  are  so  rare  they  are  con- 
spicuous and  attract  attention  out  of  all  pro- 
portion to  their  numbers. 

The  overwhelming  majority  of  farmers,  like 
men  in  all  other  walks  of  life,  work  for  the 
future,  work  for  the  generations  to  come,  work, 
in  short,  for  the  community  far  more  untiringly 
and  unselfishly  than  they  would  if  all  their 
lands  and  buildings  were  owned  by  the  com- 
\  munity  and  they  were  simply  so  many  em- 
ployees. 


VII 

THE  CARNEGIE  FORTUNE 

When  Andrew  Carnegie  sold  the  interests  he 
controlled  in   the   Carnegie   Company  to   the  • 
U.  S.  Steel  Corporation  he  received  $303,000,- 
000  in  bonds. 

Assuming  the  bonds  were  issued,  as  usual,  in 
amounts  of  $1,000,  he  received  three  hundred 
and  three  thousand  pieces  of  paper. 

What  actually  happened  at  the  moment  of 
transfer  was  that  Mr.  Carnegie  retired  from 
active  interest  in  the  steel  business  and  others 
took  his  place  —  let  us  say  he  then  and  there 
died  to  the  steel  business — that  was  all. 

Not  a  dollar  of  actual  Vv^ealth  was  disturbed. 
Not  a  pound  of  metal  was  affected.  / 

Whether  his  successors  have  operated  the 
business  as  well  and  as  productively  as  he  did 
is  a  practical  but  entirely  different  question. 

We  are  here  interested  in  the  effect  of  the 
sale  upon  the  distribution  of  wealth. 

Obviously  the  printing  of  the  bonds  created 
no  new  tangible  wealth.  The  actual  wealth  of 
the  Carnegie  Company,  its  mines,  its  furnaces, 

147 


148  Property 

its  mills,  etc.,  were  not  affected  by  tlie  bond 
issue. 

But,  not  long  after  the  transaction  things 
began  to  happen  that  did  and  do  affect  the 
community. 


During  his  long  connection  with  the  Car- 
negie Company,  Mr.  Carnegie  devoted  prac- 
tically all  his  time  and  all  his  earnings  and 
profits  to  developing  the  industry.  He  was 
literally  a  slave  to  the  business. 

So  long  as  his  profits  and  earnings  were 
reinvested  in  the  industry,  the  cost  to  the  com- 
munity of  his  exceptional  services  and  abilities 
was  simply  the  comparatively  small  amount  he 
spent  each  year  upon  himself  and  family. 

To  be  sure  his  fortune  was  increasing  rap- 
idly ;  that  is  the  value  of  his  stock  in  the  com- 
pany  —  represented  by  certificates,  pieces  of 
paper — was  increasing,  but  so  long  as  his  for- 
tune remained  invested  in  the  business  and  so 
long  as  he  drew  out  only  a  small  amount  for 
living  expenses  he  was  ricJi  only  in  the  sense 
that  he  had  the  legal  right  to  take  his  interest 


Tlie  Carnegie  Fortune  14-9 

—  i.  e.,  a  certain  amount  of  actual  wealth  —  out 
of  the  industry  and  do  with  it  as  he  pleased.^ 

If,  instead  of  selling  out,  Mr.  Carnegie  had 
retired  in  favor  of  a  son,  leaving  his  interest  in 
the  business,  and  the  son  had  gone  on  devoting 
all  his  energies  to  the  industry,  the  net  result 
to  the  country  would  be  first  the  services  of 
the  father,  then  the  services  of  the  son,  all  at 
the  cost  of  what  both  drew  out  to  spend  on 
themselves. 

And  this  might  go  on  from  generation  to  gen- 
eration until  the  family  decided  to  ivithdraw  its 
investment,  whereupon  both  the  industry  and 
the  coinmunity  would  be  very  materially 
affected. 

♦    ♦    ♦ 

One  reason  why  so  many  English  firms  and 
companies  operate  at  a  low  cost  and  are  on 
such  sound  footing,  is  because  the  families  who 


'  This  "  as  he  pleased  "  is  always  with  certain  limitations. 
As  already  noted  the  community  at  the  request  of  rela- 
tives, friends,  or  even  on  its  own  initiative  is  quick  to  inter-  j 
fere  if  a  man  shows  a  disposition  recklessly  to  squander  i 
his  fortune.    The  interference  is  always  on  the  ground  that  ' 
the  man  is  not  competent  to  manage  "  his  own  "  affairs  —  a 
very  distinct  assertion  of  the  superior  right  of  the  com- 
munity. 


150  Property 

*'  own"  them  work  for  them  generation  after 
generation,  drawing  out  only  sufficient  for 
what  an  American  would  consider  very  meager 
living  expenses. 

These  families  say  they  **  own"  the  indus- 
tries.   In  reality  the  industries  own  them. 

I  have  in  mind  one  of  the  large  establishments 
in  England  that  has  been  in  one  family  many 
generations.  The  present  generation  lives 
more  simply  and  feels  poorer  than  the  last  be- 
cause they  pour  more  and  more  of  their  profits 
into  extensions  and  improvements  and  draw 
out  less  and  less.  In  short  the  nation  is  paying 
this  family  less  and  less  to  manage  this  one 
large  enterprise. 

♦    ♦    * 

Comparatively  few  American  industries  pass 
through  periods  so  short  as  ten  or  twenty  years 
without  upheavals  and  disorganizations  due  to 
unexpected  and  arbitrary  withdrawals  of 
capital  by  either  estates  or  men  who  **  retire  " 
and  spend  or  invest  their  money  elsewhere. 
♦>    ♦    ♦ 

The  interest  on  Mr.  Carnegie's  $303,000,000 
at  5  per  cent  amounts  to  $15,150,000  each  year. 


The  Carnegie  Fortune  151 

In  addition  to  the  interest  the  Steel  Corpo- 
ration is  obliged  by  the  terms  of  the  bonds  to 
set  aside  a  certain  amount  each  year  as  a  sink- 
ing fund  with  which  to  pay  the  principal  of  the 
bonds  at  maturity. 

The  total  charge  on  the  industry,  therefore, 
is  the  interest  plus  sinking  fund  which  must  be 
paid  out  of  earnings  on  account  of  Mr.  Car- 
negie's withdrawal  before  any  money  is  devoted 

to  extensions  and  improvements.^ 
♦    ♦    ♦ 

From  the  foregoing  it  is  clear  that  the 
immediate  effect  upon  the  industry,  and  there- 

'  Estimates  of  Mr.  Carnegie's  wealth  put  it  at  possibly 
$500,000,000.  When  he  retired  in  1901  he  sold  his  securi- 
ties of  the  Carnegie  Steel  Company  to  the  United  States 
Steel  Corporation  for  $303,450,000  in  bonds  of  that  com- 
pany. He  was  possessed  of  large  interests  in  addition  to 
those  bonds.  When  he  started  in  1901  to  endow  his  great 
benefactions  he  made  inroads  into  his  capital  for  several 
years  in  gifts  to  libraries,  for  peace  propaganda,  and  to 
other  philanthropic  causes. 

The  fortune  of  $303,450,000  in  5  per  cent  bonds,  if 
allowed  to  increase  by  the  accumulation  of  interest  and 
reinvestment  since  1901,  would  amount  to  about  a  billion 
dollars  today,  but  his  enormous  benefactions  prevented 
this  according  to  financial  authorities;  hov/ever,  the  iron- 
master's ambition  to  die  poor  was  not  realized  and,  despite 
the  number  of  his  philanthropies,  it  was  believed  that  his 
fortune  was  at  his  death  as  large  as  it  ever  was. —  {News- 
paper  report.) 


152  Pro  pert  ij 

fore  upon  the  community,  when  an  owner  re- 
tires and  ivitJidraivs  his  investment  for  use 
elsewhere  is  hurdensome. 

There  are  cases  where  the  individual  owner, 
because  unprogressive,  on  account  of  age,  or 
for  other  reasons  becomes  an  actual  handicap 
to  the  business,  and  greater  progress  can  be 
made  if  he  is  gotten  rid  of  even  at  the  incon- 
venience of  having  him  withdraw  his  invest- 
ment. 

While  such  instances  are  fairly  common  they 
do  not  affect  our  argument,  inasmuch  as  the 
economic  effect  on  the  business  of  the  with- 
drawal of  capital  is  the  same  irrespective  of 
the  reason  for  the  withdrawal. 
♦    ♦    * 

Furthermore  whether  a  man  sells  his  inter- 
est to  his  partners,  his  associates,  or  to 
strangers,  his  capital  is  ivithdrawn  just  the 
same,  and  the  immediate  economic  effect  is  the 
same,  though  the  ultimate  result  may  be  to 
interest  ''  fresh  '*  or  ''  young  blood  "  —  as  the 
phrase  goes  —  so  that  the  stimulus  resulting 
from  the  new  energy  and  enthusiasm  more  than 
offsets    the    temporary   loss    of    capital,    but, 


The  Carnegie  Fortune  153 


again,  this  result  due  to  the  human  equation 
does  not  alter  the  economic  effects  of  changes 
in  investment. 

*    *    ♦ 

When  a  man  sells  his  interest  in  a  business 
he  usually: 

1.  Invests  his  money  in  some  other  business 
in  wliich  he  takes  a  more  or  less  active  interest ; 
or 

2.  Invests  it  in  securities,  such  as  mort- 
gages, stocks,  and  bonds,  in  order  to  live  out  of 
his  income  and  invest  the  surplus  in  more 
securities. 

The  economic  effects  upon  the  community 
of  these  two  courses  are  essentially  different. 

In  the  first  case  it  is  simply  a  transfer  of 
investment  from  one  industry  or  set  of  indus- 
tries to  another,  together  with  the  investor's 
active  efforts.  The  loss  in  the  one  set  of  indus- 
tries may  be  balanced  by  the  gain  in  the  new; 
the  community  may  not  suffer  any  loss. 
Though,  as  a  rule,  these  more  or  less  arbitrary, 
often  capricious  changes,  are  attended  with 
actual  loss  to  the  community  because  the  man's 
lack  of  knowledge  of  the  new  enterprise  may 


154  Property 

lead  to  foolish  expenditures  of  both  time  and 
money,  if  not  actual  loss. 

"When  a  man  retires  from  active  business  and 
devotes  himself  to  the  investment  and  reinvest- 
ment of  his  fortune  and  income  the  community 
loses  the  man's  active  services  in  the  industry 
he  leaves,  but  it  gains  the  benefit  of  his  experi- 
ence and  judgment  in  the  distribution  of  his 
fortune,  i.  e.,  a  certain  amount  of  community 
capital  —  in  other  directions. 
♦    ♦    ♦ 

While  all  men  make  some  foolish  invest- 
ments, and  all  the  investments  of  some  men 
turn  out  badly,  generally  speaking  there  is  no 
better  known  way  to  invest  and  reinvest  the 
capital  of  the  community  than  to  leave  it  to 
the  best  judgment  of  individuals  who  suffer  the 
loss  in  the  first  instance  if  the  investments  turn 
out  unsound. 

For  instance  every  advanced  community 
finds  it  wise  to  allow  bankers  pretty  wide  dis- 
cretion in  the  making  of  loans  and  selecting 
investments,  and  it  must  not  be  forgotten  that 
in  doing  this  bankers  are  simply  acting  as  the 
economic  agents   of  the  community  in  trans- 


The  Carnegie  Fortune  155 

f erring  capital  —  i.  e.,  wealth  —  from  one  indi- 
vidual or  enterprise  to  another  for  productive 
purposes. 

The  law  limits  and  supervises  the  discretion 
of  hankers  to  a  certain  extent  because  bankers 
handle  the  money  of  depositors. 

The  community  does  not  limit  or  supervise 
to  the  same  extent  the  individual's  discretion 
in  investing  ' '  his  o\\ti  ' '  money,  because  it  is 
supposed  to  be  in  an  undefined  sense  **his 
o^\Ti,"  but  in  the  last  analysis  the  individual 
fortune  is  just  as  much  community  wealth. as 
are  the  deposits  in  a  bank,  and  the  individual 
in  losing  '*his  o^^^l  "  fortune  loses  a  part  of 
the  community  fortune  just  the  same  as  does 
the  banker  when  he  makes  a  losing  investment. 

So  that  in  time  communities  may  come  to 
exercise  some  supervision  over  the  discretion 
of  the  individual  as  well  as  the  banker. 

The  disadvantage  of  state  supervision  is,  of 
course,  the  lessening  of  individual  initiative. 

The  state  has  little  imagination. 

The  state  bank  examiner  must  check  up  loans 
in  a  heartless  manner  and  reject  relentlessly^ 
While  the  individual  usually  derives  his  great- 


156  Property 

est  satisfaction  from  loans  to  penniless  men 
who  *'  make  good." 

♦    *    ♦ 

Mr.  Carnegie  did  not  retire  from  the  Car- 
negie Company  to  engage  actively  in  some 
other  business. 

Neither  did  he  retire  for  the  purpose  of  in- 
vesting his  fortune  and  his  income  productively. 

He  retired  with  the  publicly  avowed  intention 
of  spending  his  entire  fortune  in  his  lifetime. 
*i*    '%'>    *i* 

"  The  man  ivho  dies  rich  dies  disgraced." 
When  Mr.  Carnegie  made  public  that  statement 
unthi^iking  people  applauded  it  as  a  great 
sentiment. 

In  truth  it  is  about  as  senseless  and  dema- 
gogic a  combination  of  seven  words  as  ingenu- 
ity could  devise. 

♦♦♦    *J*    ♦•* 

A  man  does  not  choose  the  hour  of  his  death. 

Suppose  Mr.  Carnegie  had  died  suddenly 
while  living  modestly  in  Pittsburgh  and  while 
he  was  devoting  all  his  energies  to  the  develop- 
ment of  the  iron  and  steel  industry,  would  lie 
have    ''  died   disgraced "    simply   because    his 


The  Carnegie  Fortune  157 

interest    in   the    business    was    worth   ten    or 
twenty  or  Miy  millions  ? 


♦!♦        »I* 


Thomas  Edison  has  amassed  a  fortune  from 
his  inventions  and  by  his  capacity  for  work. 
What  he  is  ''worth"  he  probably  does  not 
know,  or  care,  because  he  is  absorbed  in  his 
work  and  his  great  aim  in  life  is  to  invent  and 
devise  useful  products  and  processes. 

If  he  should  die  today  his  estate  would  prob- 
ably show  a  fortune  of  several  millions,  but 
would  he  ''die  disgraced  f  " 

On  the  contrary  he  would  die  one  of  the  most 
honored  of  men. 

♦      *!♦      ♦ 

It  is  characteristic  of  American  business  men 
to  hury  themselves  in  their  industries  and 
enterprises,  to  work  day  and  night  to  build  up 
and  increase  their  business  —  not  their  for- 
tunes. 

The  banker  wants  to  make  his  bank  the  big- 
gest in  the  city.  The  merchant  wants  to  make 
his  shop  the  biggest  in  town.  The  manufac- 
turer wishes  to  surpass  all  rivals.  They  accu- 
mulate fortunes  but  they  pour  all  their  profits 


158  Property 

into  their  business.  Tliey  even  curtail  their 
household  and  living  expenses.  Many  a  mil- 
lionaire complains  bitterly  if  his  wife  buys  a 
new  hat.  Why?  Because  he  wants  to  increase 
his  fortune  ? 

Not  at  all,  but  because  he  hates  to  take 
money  out  of  his  business,  because  all  his  life 
he  has  been  pouring  all  his  earnings,  from  his 
first  wages,  into  his  business  and  he  has  formed 
the  habit  of  frugality,  of  saving  in  order  to 
grow. 

•>    <»    ^ 

Of  all  the  rich  men  in  the  country  compar- 
atively few  have  sold  out  and  retired.  The 
great  majority  are  slaves  to  their  business  and 
the  fortunes  of  the  great  majority  are  engaged 
productively  in  business. 

When  one  dies  the  public,  and  often  the 
family,  learn  for  the  first  time  what  he  was 
<<  worth." 

Does  a  man  **  die  disgraced  "  because  he  did 
not  sell  out,  withdraw  his  fortune  from  pro- 
ductive uses,  and  spend  the  balance  of  his  life 
in  giving  it  away  ? 


The  Carnegie  Fortune  159 

AVhether  a  man  dies  disgraced  depends  upon 
what  lie  has  done  in  his  lifetime,  not  upon  the 
moment  of  his  death  which  ordinarily  cannot 
be  foreseen. 

If  a  man  has  accumulated  his  fortune  fairly 
and  honorably,  there  is  no  disgrace  in  dying 
before  he  spends  it. 

*  ♦     ♦ 

In  fact  we  all  know  that  men  are  most  highly 
esteemed  while  they  are  working  day  and  night 
in  building  up  their  businesses  —  i.  e.  accumu- 
lating their  fortunes. 

They  are  looked  upon  with  disfavor  when 
they  ' '  retire  ' '  and  live  lives  of  luxury,  spend- 
ing their  fortunes. 

♦  ♦      4» 

"When  Mr.  Carnegie  sold  out  and  retired,  his 
action  affected  the  industry  and  the  community 
in  the  following  ways: 

1.  Loss  of  his  personal  service  in  the  indus- 
try. 

2.  Gradual  withdrawal  of  his  fortune  from 
the  industry. 


160  Property 

These  disadvantages  are  real.  Tliey  are 
equally  real  in  the  case  of  every  active  man 
Vv^ho  retires  and  devotes  his  time  and  fortune 
to  philanthropic  or  similar  purposes. 

On  the  other  hand  Mr.  Carnegie  promised 
the  community  the  following  advantages  as  the 
result  of  his  retirement  and  giving : 

1.  The  devotion  of  his  time  and  ability  to  the 
selection  of  ivorthy  objects  for  which  to 
spend  his  fortune. 

2.  The  systematic  expenditure  of  his  fortune 
for  the  objects  chosen. 

♦     <»      4» 

As  regards  the  first  promised  advantage 
there  is  obviously  the  important  question 
whether  Mr.  Carnegie  made  as  sound  and  keen 
a  philanthropist  as  he  was  a  steel  man ;  in  short 
whether  the  expenditure  of  his  fortune  was  as 
wise  and  beneficial  as  was  its  investment  in  the 
iron  and  steel  industry. 

That  is  alivays  the  big  economic  question 
when  a  rich  man  retires  from  the  business  he 
knows  and  embarks  upon  a  career  of  spending 
for  purposes  about  which  he  knows  little  or 
nothing. 


(  The  Carnegie  Fortune  161 

As  regards  the  second  advantage  he  devoted 
a  large  part  of  his  fortune  in  three  ways; 
(a)  the  building  of  public  libraries;  (b)  certain 
educational  purposes;  (c)  the  promotion  of 
peace  by  conferences,  international  tribunals, 
etc.  "What  he  did  in  these  directions  cost  him 
over  two  hundred  millions  of  dollars. 

PRTlSrCIPAL  BENEFACTIONS 

Carnegie  Corporation  (education)  .$125,000,000 

Libraries  (3,000)  65,000,000 

Carnegie  Institute,  Pittsburgh. . . .  25,000,000 
Carnegie  foundation  for  advance- 
ment of  teaching 15,000,000 

Carnegie  Research  Institute,  Wash- 
ington   10,000,000 

Carnegie  peace  endowment 10,000,000 

Carnegie   educational   fund,    Scot- 
land    10,000,000 

Carnegie  hero  fund 5,000,000 

Employees'  pension  and  relief  fund  4,000,000 

Carnegie  Music  Hall,  New  York. . .  2,000,000 

Allied  engineering  societies 2,000,000 

All  are  in  a  high  degree  ivorthy  objects. 

We  say  "cost  him"  two  hundred  millions. 
What  we  should  say  is,  cost  the  community,  for 
while  Mr.  Carnegie  pays  out  what  is  legally  his 
own,  he  is  actually  taking  from  the  steel  indus- 
try that  much  money  and  spending  it  on  the 


162  Property 

projects  named.     It  is  very  much  as  if  the 
government  levied  a  special  tax  upon  the  steel 
industry  to  do  those  things. 
♦    ♦    ♦ 

It  follows,  therefore,  that  the  rich  man  who 
is  actively  and  honorably  engaged  in  building 
up  his  business  runs  no  risk  of  "dying  dis- 
graced "  if  he  dies  in  the  midst  of  his  business 
activity,  no  matter  what  his  fortune  may  prove 
to  be. 

But  he  does  rnn  the  risk  of  *'  dying  dis- 
graced "  through  follies  or  mistakes  of  judg- 
ment, if  he  retires  from  active  work  and  de- 
votes his  life  to  spending  his  fortune  on  him- 
self, or  in  giving  it  away. 

Both  are  primarily  selfish  objects. 

Carefully  analyzed  Mr.  Carnegie 's  motive  in 
giving  his  fortune  for  public  libraries  was  as 
selfish  as  that  of  the  rich  man  who  squanders 
his  in  riotous  living. 

It  was  Mr.  Carnegie's  pleasure  to  give  in  the 
ways  he  did. 

It  is  another  rich  man's  pleasure  to  spend  on 
race  horses,  yachts,  etc.,  etc. 

We  are  not  comparing  the  two  objects,  for 


The  Carnegie  Fortune 163 

the  objects  of  the  latter  are  frivolous  and  per- 
haps beneath  contempt  while  the  objects  of  the 
former  are  beneficial  and  praiseworthy,  but  the 
moving  spirit  is  fundamentally  the  same  in 
both  men — personal  gratification. 

Both  men  may  have  made  any  number  of 
sacrifices  in  accumulating  their  fortunes; 
neither  makes  any  sacrifices  in  spending. 

Mr.  Carnegie's  taste  ran  to  public  works 
such  as  libraries  and  educational  foundations. 

The  other  man's  taste  runs  to  fast  horses 
and  yachts. 

Each  spends  his  hundred  millions  in  the 
manner  that  gives  him  the  greatest  amount  of 
pleasure. 

♦  ♦    ♦ 

Mr.  Rockefeller's  greatest  dissipation  is  a 
game  of  golf.  He  shuns  publicity  as  much  as 
Mr.  Carnegie  courted  it.  He,  too,  is  giving 
away  hundreds  of  millions,  but  as  quietly  as 
possible  and  in  a  very  systematic  way.  That 
is  his  greatest  pleasure. 

*  ♦    ♦ 

The  public  ^ is  always  impressed  by  the  mil- 
lions given  by  these  very  rich  men,  it  overU)oks 


164  Property 

the  much  larger  sum  total  given  by  millions  of 
poorer  and  poor  men. 

Everybody  gives  something  for  some  pur- 
pose. 

Whether  the  gift  is  large  or  small  it  is  nec- 
essarily a  diversion  of  wealth. 

That  is  the  point,  a  diversion  of  ivealth. 

"Whether  it  is  the  government  collecting  a 
tax,  or  a  poor  man  contributing  a  dime  to  char- 
ity, fundamentally  the  economic  proposition  is 
the  same,  it  is  a  diversion  of  wealth  from  where 
it  is  usefully  employed  to  purposes  that  may 
or  may  not  be  as  valuable  to  the  community. 

That  is  always  the  question,  whether  the 
objects  for  w^hich  the  government  spends  the 
money  it  collects,  and  those  for  which  Mr.  Car- 
negie and  others  spend  the  money  they  accu- 
mulate are  as  valuahle  to  the  community  as  are 
the  productive  enterprises  from  which  the 
money  is  withdrawn. 

♦    ♦    ♦ 

That  question  should  be  asked  and  answered 
with  regard  to  every  object  for  which  the  gov- 
ernment or  the  individual  proposes  to  spend 
money. 


The  Carnegie  Fortune  165 

If  asked  it  would  be  found,  first  of  all,  that 
the  government  is  the  most  reckless  and  waste-  ,, 
ful  spender  of  money,  that  it  spends  its  money  // 
"like  a  drunken  sailor"  in  ways  and  on  ob-'' 
jects  that  will  not  stand  investigation. 

Secondly  it  would  be  found  that  many  char- 
itable, philanthropic,  and  other  organizations 
spend  wastefully. 

Thirdly  it  would  be  found  that  many  indi- 
viduals spend  extravagantly  and  viciously. 

But  it  would  also  be  found  that  most  indi- 
viduals who  give  money  for  public  or  philan- 
thropic purposes  do  so  with  greater  foresight, 
sounder  judgment,  and  finer  imagination  than 
any  government,  local  or  national. 

Compare,  for  instance,  the  shrewd  manner 
in  which  Mr.  Carnegie  caused  to  be  erected 
library  buildings  all  over  the  country,  with  the 
log-rolling  methods  of  Congress  in  building 
post  offices  and  other  pulilic  buildings,  where 
the  expenditure  of  the  piihlic  money  is  the 
prime  object  and  the  erection  of  a  suitable 
building  at  lowest  possible  cost  is  the  last  thing 
thought  of. 

In  the  hands  of  the  government  and  devoted 


166  Property 

to  the  same  purpose  Mr.  Carnegie's  millions 
would  not  have  accomplished  half  the  results. 

Therefore,  it  follows,  that  if  the  country  is 
in  need  of  public  library  buildings,  the  com- 
munity has  saved  money  —  literally  many  mil- 
lions— by  having  a  Mr.  Carnegie  instead  of 
the  government  distribute  the  money. 

But  the  iron  and  steel  industry  pays  for  the 
libraries,  not  Mr.  Carnegie. 


VIII 

WEALTH  IN  POSSESSION 

It  has  been  clearly  shown  that  private  prop- 
erty as  we  find  it  in  all  communities  that  have 
passed  the  most  primitive  stage  of  develop- 
ment embraces  tivo  entirely  distinct  kinds  of 
oivnersJiip. 

1.  Wealth  in  actual  possession  or  enjoy- 
ment. 

2.  Wealth  not  in  actual  possession  or  en- 
joyment. 

Wealth  not  in  possession  is  represented  by 
pieces  of  paper  of  many  and  various  forms, 
which  are  legal  evidences  of  property  rights. 
In  highly  organized  communities,  such  as  the 
leading  nations  of  today,  these  legal  rights  are 
both  numerous  and  complex.  In  fact  the  com- 
mercial and  industrial  development  of  any 
given  nation  is  measured  by — develops  with 
—  the  variety  and  complexity  of  legal  titles 
created  and  recognized. 

The  actual,  the  material  wealth  of  a  nation 
increases  comparatively  slowly,  but  the  paper, 
the  title  wealth,  may  increase  rapidly  and  in 


168 Property 

times  of  inflation  and  extraordinary  expansion 
of  credit  it  may  increase  by  leaps  and  bounds, 
to  decrease  equally  rapidly  in  times  of  defla- 
tion and  panic.  Against  a  certain  industry  one 
set  of  men  issues  a  million  dollars  in  stocks  and 
bonds.  The  company  is  reorganized  —  legiti- 
mately or  speculatively  —  and  another  set  of 
men  with  greater  vision,  enthusiasm,  or  reck- 
lessness, issues  five  millions  in  stocks  and 
bonds  against  precisely  the  same  properties. 

A  farm  is  worth  today  fifty  dollars  an  acre 
and  outstanding  in  the  community  are,  say,  two 
pieces  of  paper,  (a)  title  deed;  (b)  a  mortgage 
for  a  thousand  dollars. 
/  Oil  is  found  on  the  farm,  a  company  is  or- 
ganized, and  before  any  money  to  speak  of  is 
spent  in  drilling  wells,  paper  is  issued  against 
the  farm  to  the  extent  of  hundreds  of  thou- 
sands in  stocks  and  bonds.  Several  com- 
panies are  frequently  organized  based  on  the 
one  piece  of  property : 

1.  An  owning  company  that  takes  the  title 
deed  and  issues  millions  in  stocks  and  bonds; 

2.  A  leasing  company   that  leases   all   or 
parts  of  the  property,  and  on  the  strength  of 


Wealth  in  Possession  169 

its  lease  issues  millions  in  stocks  and  bonds; 

3.  A  royalty  company  that  actually  oper- 
ates and  pays  so  much  per  barrel  to  the  leasing 
company,  and  this  royalty  company  capitalizes 
its  rights  in  millions  of  stocks  and  bonds  — 
and  so  on. 

All  these  issues  and  transactions  may  tnrn 
out  profitably  if  the  farm  turns  out  to  be  a  rich 
oil  field;  or  they  may  prove  valueless  if  the 
field  is  unproductive. 

Meanwhile  the  farm  as  a  farm  remains  as 
it  was  before  —  less  some  actual  damage  in 
sinking  wells.  The  immense  superstructure  of 
paper  wealth  is  based  on  beliefs  and  hopes,  and 
made  possible  only  in  communities  with  highly 
developed  financial  and  commercial  organiza- 
tions. 

Whether  or  not  the  creation  of  paper  wealth 
should  be  restricted  is  a  large  practical  ques- 
tion that  cannot  be  discussed  here. 

The  point  in  our  argument  is  that  the  stage 
of  commercial  and  industrial  development  of 
every  great  modern  nation,  such  as  England, 
or  such  as  the  United  States,  may  be  gauged 
by  the  variety  of  paper  wealth  in  use.    Eng- 


170  Property 

land's  supremacy  in  foreign  trade  is  largely 
due  to  the  fact  that  she  makes  better  and  more 
abundant  use  of  certain  forms  of  international 
paper-credit  wealth  than  do  the  people  of  the 
United  States;  she  offers  the  people  who  deal 
with  her  easier  and  cheaper  facilities  for  the 
paperizing  of  their  resources  than  we  oifer. 

Crudely  speaking  we  demand  more  nearly 
the  actual  goods,  while  she  accepts  the  various 
forms  of  paper  issued  against  the  goods. 

The  distinguishing  characteristic  of  title 
wealth  is  —  as  we  have  clearly  shown  —  that 
it  leaves  the  actual  possession  and  control  in 
the  hands  of  others.  The  legal  owner  may 
never  see,  nor  exercise,  the  slightest  control 
over  the  property  he  "owns."  Those  in  pos- 
session, the  real  workers,  may  never  see  nor 
know  the  legal  owner. 

But  aside  from  the  pieces  of  paper  a  man 
may  own,  he  may  also  actually  possess,  or  con- 
trol to  the  exclusion  of  others  two  distinct 
forms  of  wealth: 

1.  LAND 

2.  LUXURIES 

A  man's  real  wealth  is  measured  by  the 


WeaJtli  in  Possession  171 

things  —  food,  clothing,  houses,  land,  etc. — 
that  he  controls  for  hwiself  to  the  exclusion  of 
others. 

The  only  inequalities  in  the  distribution  of 
wealth  that  are  of  any  irritating  significance 
are  those  of  enjoyment  to  the  exclusion  of 
others. 

That  idea  must  be  clearly  comprehended. 

If  a  multi-millionaire  like  Eussell  Sage  lives 
as  simply  as  a  workingman,  obviously  he  is  not 
a  millionaire  in  the  sense  of  a  man  like  William 
Waldorf  Astor  who  buys  estates  in  England 
and  spends  enough  money  socially  and  politi- 
cally to  get  himself  created  a  peer. 

Aesthetically  and  socially  Astor  may  be  a 
useful  factor,  but  economically  Sage  was  in- 
comparably more  valuable. 
♦    ♦    ♦ 

In  land  and  luxuries  there  is  a  large  control 
to  the  exclusion  of  the  masses,  and  it  is  this 
exclusion  that  furnishes  the  real  basis  for 
whatever  discontent  there  is  over  the  distribu- 
tion of  wealth. 

The  nominal  basis  is  the  statistical — that  is 
the  enormous  disparity  there  seems  to  be  be- 


172 Property 

tween  the  man  who  has  only  his  wages  or  his 
salary  and  the  man  who  has  a  million  or  a 
billion,  but  the  man  who  has  a  good  salary  may 
spend  more  on  himself  than  the  man  who  has 
a  million  in  stocks  and  bonds. 
♦    ♦    ♦ 

We  will  proceed  now  to  the  consideration  of 
the  two  forms  of  wealth  that  men  commonly 
do  control  to  the  exclusion  of  others,  and  try 
to  see  to  what  extent  this  control  should  be 
limited. 

This  theoretically  true  proposition  will  clear 
the  way: 

If  all  control  of  wealth  to  the  exclusion  of 
others  were  abolished  so  that  all  individuals 
were  on  a  footing  of  substantial  equality  as 
regards  food,  clothing,  houses,  surroundings, 
advantages,  pleasures,  etc.,  no  one  would  have 
the  slightest  concern  regarding  the  accumula- 
tion and  distribution  of  paper  titles.  A  man 
might  have  a  million  or  a  billion  in  stocks  and 
bonds,  but  so  far  as  any  material  or  other  ad- 
vantage to  him  or  his  children  over  the  rest  of 
the  community  is  concerned,  he  would  have 
none. 


Wealth  in  Possession  173 

The  trouble  starts  when  a  man  begins  to 
turn  his  paper  wealth  into  forms  of  property 
and  pleasures  that  others  cannot  have  or  en- 
joy—  concrete  inequalities  begin  to  appear. 


IX 

LAND 

Private  property  in  land  is  an  incentive  and, 
like  private  property  in  moveables,  its  only 
justification  is  that  it  is  an  incentive  to  pro- 
duction and  progress. 

In  so  far  as  it  ceases  to  be  an  incentive  to 
precisely  that  extent  does  it  cease  to  be  justi- 
fiable. 

The  average  man  —  in  fact  nearly  every 
writer  on  the  subject  —  is  quick  to  admit  a 
man's  "right"  to  the  fruits  of  his  labor,  to 
what  he  grows,  gathers,  or  makes  with  his  own 
hands,  while  many  men  and  many  writers  deny 
a  man's  ''right"  to  the  exclusive  possession 
of  the  soil  or  other  natural  advantages.  They 
may  admit  its  expediency  usually  under  the 
excuse  of  social  conditions  more  or  less  imper- 
fect, but  they  deny  the  ' '  right. ' ' 

«     «     4» 

So  far  as  either  abstract  or  concrete  **  right  " 
is  concerned,  there  is  no  distinction  between 
the  right  to  own  and  hold  land  and  the  right 
to  own  and  hold  what  one  grows  on  the  land, 

174 


Land  175 

or  makes  from  natural  products  and  materials. 

In  both  classes  of  property  the  "  right "  is 
neither  more  nor  less  than  social  convention 
guarded  by  law  on  the  theory  that  such  rights 
best  promote  social  welfare. 

The  "rights"  are  not  precisely  the  same. 
Society  in  its  laws  and  customs  recognizes  and 
establishes  many  distinctions  between  personal 
property  rights  and  real  property  rights.  Gen- 
erally speaking  the  latter  are  more  restricted 
—  less  absolute,  so  to  speak.  The  two  classes 
of  rights  are  so  distinct  the  law  student  is 
obliged  to  take  two  courses  of  study,  one  de- 
voted to  realty,  the  other  to  personalty,  and 
even  then  he  will  know  little  or  nothing  regard- 
ing the  law  of  timber,  mineral  oil,  and  water 
power  rights  —  all  important  variations  of  land 
ownership. 

♦    *    ♦ 

Land  rights  are  personal-property  rights 
in  another  important  feature. 

They  are  evidenced  by  paper  titles,  ' 

One  man  may  occupy  and  work  a  piece  of 
land  that  is  "  owTied  "  by  another.     The  so-/ 
called  * '  owner ' '  simply  holds  the  paper  titlej7 


176  Property 

The  '*  absentee  "  landlord  who  is  so  bitterly 
denounced  in  many  quarters,  is  the  "absentee" 
stockholder  in  another  guise  —  or  rather  the 
same  man  holding  differently  printed  pieces 
of  paper. 

^    «    ♦ 

Once  get  and  keep  clearly  in  mind  that  all 
property  rights  are  recognized  and  established 
simply  as  incentives,  simply  and  solely  on  the 
theory  that  they  best  promote  individual  and 
social  welfare,  our  attitude  toward  them 
changes  immediately,  and  we  are  in  a  position 
to  discuss  each  right,  not  as  a  burning  outrage 
against  mankind,  but  on  its  merits  as  an 
expedient  that  may  be  modified  or  abandoned 
at  will,  and  that  is  certain  to  undergo  modifica- 
tions in  time. 

Looking  at  the  broad  subject  of  private  prop- 
erty in  land  and  natural  resources  in  a  dispas- 
sionate manner,  it  does  differ  in  certain  impor- 
tant characteristics  from  private  property  in 
moveables. 

♦     *    ♦ 

It  is  possible  under  existing  laAvs  and  condi- 
tions for  anv  individual  to  '*  own  "  and  hold  to 


Land  177 

the  exclusion  of  others,  land  to  the  value  of 
many  millions. 

An  individual  may  own  and  hold  without 
working  thousands  and  thousands  of  acres  of 
farming,  timber,  coal,  oil,  and  mineral  lands. 

A  man  may  be  an  actual  millionaire  in  land, 
but  land  is  the  only  form  of  wealth  that  may  be 
held  to  the  exclusion  of  others  without  deterior- 
ation in  value.* 

Without  any  effort  on  his  part  a  man  may 

become  a  millionaire  by  the  mere  increase  in 

value  —  the   unearned   increment  —  of   vacant 

city  property,  or  of  farming  land,  or  of  timber, 

coal,  oil,  and  mineral  properties. 
»♦♦   »:♦   ♦•♦ 

In  so  far  as  private  property  in  land  is  an 

'A  man  might  hoard  many  thousands  in  gold,  or  even 
in  coal  or  wheat,  to  the  exclusion  of  others,  letting  the 
gold  lie  idle  and  the  wheat  and  coal  perish,  but  this  course 
would  be  so  unusual, .his  family  or  the  state  would  inter- 
fere on  the  ground  he  was  not  sane.  Furthermore  if  any 
number  of  rich  men  did  such  things  laws  would  be  speed- 
ily passed  to  prevent  the  withdrawing  of  actual  wealth 
from  productive  uses,  and  hoarding  it;  in  other  words  the 
millionaire  is  permitted  the  satisfaction  of  thinking  him- 
self rich  so  long  as  he  does  not  attempt  to  withdraw  his 
wealth  from  where  it  is  productively  employed  by  others. 
He  can  accumulate  his  pieces  of  paper  undisturbed  so 
long  as  others  —  and  through  them  the  community  —  have 
the  real  use  and  enjoyment  of  his  wealth. 


178  Property 

incentive  to  greater  productive  effort  it  is  a 
benefit,  but  when  it  fails  to  act  as  such  incen- 
tive it  should  be  limited  accordingly. 

It  is  significant  how  often  and  at  how  many 
different  angles  we  come  against  property  in 
land  as  the  one  stuhhorn  proposition  in  every 
attempt  to  work  out  a  solution  of  the  problem 
of  the  just  distribution  of  wealth. 

It   is   the    most    stuhhorn   factor   in    social 
economy,  and  until  it  is  understood  and  rightly 
dealt  with,  it  will  block  every  effort  toward 
reform  of  economic  conditions. 
♦♦♦    ♦♦♦    ♦♦« 

The  proposition  that,  aside  from  land- 
owners, there  are  few  actual  millionaires,  may 
seem  startling,  but  it  is  true. 

However  widely  this  little  book  may  be  read, 
not  a  reader  will  be  able  to  name  a  man  —  aside 
from  land-owners — who  has  at  any  given 
moment  the  actual  and  exclusive  possession  of 
a  million  dollars  of  wealth. 

If  you  name  a  man  who  **  owns  "  an  immense 
factory,  the  factory  is  in  the  actual  possession 
and  control  of  his  employees,  they  are  oper- 
ating it  primarily  for  their  own  benefit,  second- 


Land 179 

arily  for  his,  in  reality  for  the  coimnunity.  If 
he  dies  suddenly  the  factory  goes  on  the  same. 
If  the  government  should  buy  or  confiscate  it, 
work  would  go  right  on.  If  he  sells,  the  em- 
ployee may  not  know  it  for  weeks  or  months. 
♦    ♦    ♦ 

If  you  point  to  a  rich  man's  home,  it  is  true 
it  may  have  cost  a  million  dollars,  but  in  just 
what  sense  is  it  hisf 

The  labor  of  the  community  built  and  fur- 
nished it,  just  as  it  built  the  public  library  in 
the  next  block. 

Assume  for  the  sake  of  the  argument  the 
two  buildings  in  outward  appearance  are  exact 
duplicates  and  equally  ornamental  to  the  street, 
then  so  far  as  improvement  of  the  street  is 
concerned  one  is  as  valuable  to  the  community 
as  the  other. 

True  the  library  is  incomparably  the  more 
useful,  but  the  millionaire  does  not  live  alone, 
nor  does  he  exclude  the  public  entirely. 

His  house  is  occupied  by  many  servants  and 
employees  and  it  is  kept  in  condition  by 
plumbers,  painters,  decorators. 

If  there  is  a  lawn  it  is  kept  in  order  almost 


\ 


180  Property 

wholly  for  the  pleasure  of  those  who  pass,  just 
as  the  park  across  the  street  is  kept  in  order 
to  please  the  public. 

Of  the  actual  cost  of  the  house  itself  a  large 
percentage  was  spent  upon  the  outside,  upon 
its  appearance  to  make  it  attractive  to  others. 

All  its  costly  contents,  furniture,  rugs,  pic- 
tures, have  been  gathered  from  all  over  the 
world,  not  that  the  "  owner  "  may  enjoy  them 
to  the  exclusion  of  others,  but  in  order  that 
others  may  see  them. 

In  a  sense  the  house  is  a  small  museum.  It 
is  not  open  to  the  public  generally  but  it  is 
open  to  a  large  number.  As  the  ''  collection  '* 
of  pictures,  bric-a-brac,  curios,  etc.,  increases, 
the  '*  owner  "  almost  invariably  seeks  to  have 
it  seen  and  enjoyed  by  larger  and  larger  num- 
bers; he  either  throws  his  house  open  on  cer- 
tain days,  thereby  making  it  for  the  time  being 
a  public  museum,  or  he  loans  and,  often,  finally 
gives  his  collection  to  a  public  institution. 
♦    ♦    ♦ 

/  The  real  incentive  to  build  a  costly  home  is 
the  interest  and  applause  of  the  public. 

The  owner  may  have  been  moved  by  motives 


Land  181 

of  vulgar  ostentation,  by  the  desire  to  "  outdo  " 
his  neighbors,  in  short  to  splurge  and  display 
his  wealth. 

But  a  man  cannot  be  ostentatious,  cannot 
splurge  without  a  public,  any  more  than  a  the- 
atrical manager  or  the  governing  body  of  a 
museum. 

The  nation  splurges  in  its  public  buildings 
and  makes  some  sad  failures. 

There  is  a  strong  tendency  in  this  country 
to  require  that  buildings  on  certain  streets  shall 
conform  to  certain  standards  of  size  and  beauty. 
This  is  in  the  interest  of  the  community.  It 
means  that  the  individual  who  builds  on  the 
street  must  build  a  fifty  or  a  hundred-thousand 
dollar  building,  even  though  he  himself  would 
be  content  to  live  in  a  cottage.  / 

If  Fifth  Avenue  is  lined  with  costly  resi- 
dences and  business  blocks  it  is  because  the 
standards  set  by  the  community  call  for  large 
expenditures  on  a  street  so  important  to  the  , 
life  of  the  city. 

If  a  man  should  erect  a  cheap  garage  on 
Fifth  Avenue  the  entire  city  would  resent  it. 
Manufacturing  is  barred  from  certain  blocks. 


182       Property 

If  we  keep  this  proposition  clearly  in  mind 
— that  property  in  all  its  forms  is  neither  more 
nor  less  than  so  many  different  kinds  of  con- 
trol, encouraged,  permitted,  limited  by  the 
community  for  its  welfare  —  we  have  paved  the 
way  for  a  dispassionate  discussion  of  the  ad- 
vantages and  disadvantages  of  any  particular 
form  of  property  —  such,  for  instance,  as  that 
in  land. 

*     <►    ♦ 

Land  by  reason  of  its  more  permanent  char- 
acter and  definite  quantity,  is  sharply  dis- 
tinguished from  all  forms  of  property  that  are 
created  by  human  effort. 

But  private  property  in  land  developed  like 
all  other  rights  to  meet  and  better  conditions. 

Every  attempt  to  distinguish  fundamentally 
between  rights  to  land  and  natural  resources 
on  the  one  hand  and  rights  to  personal  prop- 
erty on  the  other,  leads  to  confusion  worse  con- 
founded since  it  necessarily  assumes  something 
sacred  or  indisputable  in  the  latter  rights,  and 
this  assumption  obviously  blocks  all  attempts 
on  the  part  of  the  community  to  limit  those 
rights. 


Land  183 

In  fact  the  assnmption  necessarily  denies  the 
slow  evolution  of  those  rights;  for  if  they 
evolved  to  meet  community  needs,  increasing 
in  number  and  complexity  as  society  advances,^ 
it  is  plain  they  may  devolve  to  meet  reverse 
conditions. 


«♦    «« 


The  literature  of  communism,  socialism,  and 
radical  economics  generally  is  filled  with  argu- 
ments to  the  effect  that  private  ownership  of 
land  is  in  some  way  fundamentally  distinguish- 
able from  private  ownership  of  personal  prop- 
erty, and  is  an  outrage  upon  mankind. 

Be  it  said  to  the  credit  of  the  logical  com- 
munists  that    is   not    their   contention;    they 
denounce  personal  property  rights  as  vigor- 
ously as  real.  / 
*    ♦    ♦ 

Henry  George^  lays  down  the  following 
proposition : 

What  constitutes  the  rightful  basis  of  property? 

A  man  belongs  to  himself,  so  his  labor  when  put  in 
concrete  form  belongs  to  him. 

For  this  reason,  that  which  a  man  makes  or  pro- 
duces is  his  own,  as  against  aU  the  world  —  to  enjoy, 

^Progress  and  Poverty,  Book  vii,  chap.  i. 


o 


184  Property 

or  to  destroy,  to  use,  to  exchange,  or  to  give.  No  one 
else  can  rightfully  claim  it,  and  his  exclusive  right 
to  it  involves  no  wrong  to  anyone  else.  Thus  there 
is  to  everything  produced  by  human  exertion  a  clear 
and  indisputable  title  to  exclusive  possession  and 
enjoyment,  which  is  perfectly  consistent  with  justice, 
as  it  descends  from  the  original  producer,  in  whom 
it  vested  hy  natural  law} 

It  would  be  difficult  to  embody  in  so  few 
terse  rhetorical  lines,  more  false  premises  and 
false  logic. 

As  matters  of  fact : 
\         1.    A  man  does  not  belong  to  hims-elf.    Bio- 
logically  he   belongs   in   part   first   of   all   to 
woman;  secondly,  to  his  offspring;  thirdly,  to 
his  tribe  or  people. 

A  man  no  more  belongs  to  himself  than  a 
woman  belongs  to  herself,  a  babe  to  itself. 

The  proposition  is  mere  sounding  rhetoric, 
but  it  has  worked  no  end  of  harm  throughout 
the  ages.  It  is  at  the  basis  of  the  individual's 
fight  against  restraint,  against  the  reign  of  law 
and  order  that  has  made  him  what  he  is. 
/  2.  The  fruits  of  a  man's  labor  do  not  belong 
\    to  him. 


'  Italics  are  the  writer's. 


Land  185 

They  belong  to  his  mate,  his  offspring,  his 
tribe,  without  whose  cooperation  there  would 
be  no  * '  fruits  ' '  or  property  of  any  kind. 

3.  A  man's  rights  to  the  fruits  of  his  labor 
are  not  vested  by  natural  law. 

As  here  used  "natural  law'^  is  simply 
rhetoric.  We  live  in  the  midst  of  natural  laws, 
both  utilizing  and  struggling  against  them,  but 
there  is  no  ' '  natural  law ' '  that  gives  me  a 
right  to  the  pen  I  hold  or  the  clothes  I  wear, 
the  house  I  live  in,  or  the  land  it  stands  on. 
All  these  rights  are  established  by  human  laws 
and  institutions,  and  each  one  may  be  modified 
or  abolished;  as  a  matter  of  fact  not  one  re- 
mains precisely  the  same  from  generation  to 
generation. 

*>    *>    *> 

It  would  be  difficult  to  condense  into  the  same 
number  of  words  more  inconsequential  reason- 
ing than  the  following: 

The  pen  with  which  I  am  writing  is  justly  mine. 
No  other  human  being  can  rightfully  lay  claim  to  it, 
for  in  me  is  the  title  of  the  producers  who  made  it. 
It  has  become  mine,  because  transferred  to  me  by  the 
stationer,  to  whom  it  was  transferred  by  the  importer, 
who  obtained  the  exclusive  right  to  it  by  transfer  from 


186  Property 

the  manufacturer,  in  whom,  by  the  same  process  of 
purchase,  vested  the  rights  of  those  who  dug  the  mate- 
rial from  the  ground  and  shaped  it  into  a  pen.  Thus, 
my  exclusive  right  of  ownership  in  the  pen  springs 
from  the  natural  right  of  the  individual  to  the  use  of 
his  own  faculties.^ 

Here  is  a  description  of  a  series  of  rights, 
every  one  of  which  is  created  by,  and  rests 
upon,  the  laws  and  institutions  of  a  highly 
organized  society,  and  not  one  of  which  is  in 
any  sense  "  vested  "  by  any  natural  law.  The 
price  paid  for  the  pen  is  distributed  back  along 
a  long  line  of  individuals  from  the  stationer  at 
the  corner,  to  the  miner  at  the  mine.  At  per- 
haps every  point  in  the  line  labor  loudly  com- 
plains it  does  not  get  its  fair  share  of  the  re- 
turn for  the  immediate  process.  Theoretically 
speaking,  labor  cannot  possibly  —  any  more 
than  capital  —  get  its  exactly  correct  share.  In 
what  sense,  then,  do  I  **  own"  a  pen  in  the  pro- 
duction of  which  any  man  has  put  either  more 
or  less  labor  than  he  was  paid  for? 

The  simple  fact  is  I  have  in  my  possession  a 
pen — it  may  have  been  given  me;  I  may  have 
paid  half-price  at  a  bankrupt  sale;  or  I  may 

^Progress  and  Poverty,  Book  vii,  chap.  i. 


Land  187 

have  paid  an  excessive  price  as  the  result  of  a 
mistake  or  of  extortion  on  the  part  of  the 
dealer. 

The  law  recognizes  and  protects  my  posses- 
sion; it  creates  what  is  called  my  *'o^vnership/' 
and  it  is  often  quick  to  cancel  or  modify  that 
ownership  to  the  extent  of  my  paying  over 
again,  if  it  finds  my  title  is  not  legal.  Or  it 
may  compel  me  to  devote  a  part  of  the  value  of 
the  pen  (included  as  it  is  in  the  sum  total  of 
my  wealth)  to  the  support  of  my  wife  and 
children,  the  lajdng  of  a  walk  or  a  pavement, 
etc.  The  community  is  deaf  to  my  plea  that  my 
right  to  the  pen  and  other  personal  property  is 
**  vested  by  natural  law." 

♦    ♦    ♦ 

George  goes  on  to  say: 

This  right  of  ownership  that  springs  from  labor 
excludes  the  possibility  of  any  other  right  of  owner- 
ship. 

The  right  to  the  produce  of  labor  cannot  be  enjoyed 
without  the  right  to  the  free  use  of  the  opportunities 
offered  by  nature,  and  to  admit  the  right  of  property 
in  these  is  to  deny  the  right  of  property  in  the  prod- 
uce of  labor. 

Whatever  may  be  said  for  the  institution  of  private 


( 


188  Property 

property  in  land,  it  is  therefore  plain  that  it  cannot 
be  defended  on  the  score  of  justice. 

The  equal  right  of  all  men  to  the  use  of  land  is  as 
clear  as  their  equal  right  to  breathe  the  air^ —  it  is  a 
right  proclaimed  by  the  fact  of  their  existence. 

♦  ♦     ♦ 

These  propositions  sound  convincing,  and 
unhappily  they  do  convince  and  stir  the  dis- 
contented and  the  superficial  to  the  point  of 
revolution  and  rebellion  against  authority. 

♦  ♦    ♦ 

If  the  matter  were  so  plain  as  George  claims, 
private  property  in  land  M^ould  have  ended  long 
ago;  in  fact  it  is  difficult  to  see  how  it  could 
have  evolved  and  gained  so  strong  a  foothold 
the  world  over. 

Yet  here  it  is,  one  of  the  basic  institutions  of 
social  advancement.  The  logical  economist 
and  social  philosopher  can  reach  but  one  con- 
clusion, the  institution  must  have  been  an 
economic  necessity.  It  may  not  be  perfect;  it 
may  call  for  material  modification;  but  the 
same  may  be  said  of  all  personal  property 
rights,  for  like  them  it  is  the  product  of 
economic  and  social  evolution. 

George  goes  on  to  demonstrate  by  a  long 


Land 189 

revue  of  primitive  societies^  that  land  and 
natural  resources  were  the  property  of  the 
tribe- — precisely  as  might  be  expected. 

The  smaller,  the  simpler,  and  cruder  the 
social  organization,  the  fewer  the  rights  of  all 
kinds,  especially  exclusive  rights  to  the  occu- 
pation of  tracts  of  land,  large  or  small.  Con- 
ditions rendered  such  rights  of  little  value  to 
the  individual  and  possibly  inconvenient  to  the 
tribe.  Fifty  years  ago  in  our  sparsely  settled 
western  territories  exclusive  rights  to  vast 
grazing  lands  were  imperfectly  recognized; 
sheep-owners  and  cattle-owners  would  fight 
over  them,  since  sheep  spoil  the  grazing  for 
cattle.  But  as  the  territories  became  more 
densely  populated  rights  to  the  use  and  occupa- 
tion of  natural  resources  became  more  clearly 
defined  and  more  complex. 
*i*    *tf    ^ 

George  rather  naively  confesses  the  futility 
of  his  labored  demonstration  in  these  two  sum- 
mings  up: 

The  general  course  of  the  development  of  modern 
civilization  since  the  feudal  period  has  been  to  the 

'^Progress  and  Poverty,  Book  VII,  chap.  iv. 


190  Property 

subversion   of   these   natural   and   primary   ideas   of 
collective  ownership. 

The  reason,  I  take  it,  that  with  the  extension  of 
the  idea  of  personal  freedom  has  gone  on  an  exten- 
sion of  the  idea  of  private  property  in  land,  is  that  as 
in  the  progress  of  civilization  the  grosser  forms  of 
supremacy  connected  with  land  ownership  were 
dropped,  or  abolished,  or  became  less  obvious,  atten- 
tion was  diverted  from  the  more  insidious,  but  really 
more  potential  forms,  and  the  land-owners  were 
easily  enabled  to  put  property  in  land  on  the  same 
basis  as  other  property. 

The  importance  of  this  paragraph  lies  in  the 
admission  of  fact  that  with  the  development  of 
society,  private  rights  in  land  developed  par- 
allel with  rights  in  other  property. 

George  wonld  have  his  readers  believe  that 
personal  property  rights  are  **  vested  by 
natural  law ' '  and  are  jnst ;  while  real  prop- 
erty rights  are  contrary  to  natural  law  and 
unjust,  yet  both  have  evolved  along  the  same 
lines  and  attained  substantially  the  same  de- 
gree of  complexity. 

♦    ♦    * 

With  far  less  heat  and  rhetoric  Herbert 
Spencer  ^  reached  the  same  conclusions  regard- 

^  Social  Statics,  chap.  ix. 


Land  191 

ing  private  property  in  land  and  printed  them 
when  Henry  George  was  a  young  man  of 
twenty,  and  thirty  years  before  Progress  and 
Poverty  was  published. 

Spencer's  reasoning  is  as  follows: 

1.  Given  a  race  of  beings  having  like  claims 
to  pursue  the  objects  of  their  desires  —  given 
a  world  adapted  to  the  gratification  of  those 
desires  —  a  world  into  which  such  beings  are 
similarly  born,  and  it  unavoidably  follows  that 
they  have  equal  rights  to  the  use  of  this  world. 
For  if  each  of  them  *'has  freedom  to  do  all 
that  he  wills  provided  he  infringes  not  the 
equal  freedom  of  any  other,  "^  then  each  of 
them  is  free  to  use  the  earth  for  the  satisfac- 
tion of  his  wants,  provided  he  allows  all  others 


*  This  purely  theoretical  proposition  is  at  the  basis  of 
Spencer's  reasoning  and  conclusions  in  Social  Statics.  It 
is  printed  in  italics  as  his  first  •principle  —  see  chapter  ix. 
It  is  the  fundamental  basis  of  Individualism,  of  a  social 
philosophy  that  views  society  primarily  and  practically 
solely  from  the  standpoint  of  the  individual;  it  starts  out 
with  an  abstract  and  hypothetical  individual  —  aloof  from 
all  family,  tribal,  social  ties  —  and  assumes  that  individual 
possessed  certain  "  natural  "  rights,  which  he  relinquishes 
in  part  as  he  becomes  a  member  of  society.  The  old 
Rousseauan  —  contrat  social  —  state  of  nature,  etc.,  the- 
ories over  again. 


192  Property 

the  same  liberty.  And  conversely,  it  is  mani- 
fest that  no  one,  or  part  of  them,  may  use  the 
earth  in  such  a  way  as  to  prevent  the  rest  from 
similarly  using  it,  since  that  to  do  this  is  to 
assume  greater  freedom  than  the  rest,  and  con- 
sequently to  break  the  law. 

Equity,  therefore,  does  not  permit  private 
property  in  land. 

Briefly  reviewing  the  argument,  we  see  that 
the  right  of  each  man  to  the  use  of  the  earth, 
limited  only  by  the  like  rights  of  his  f  ellowmen, 
is  immediately  deducible  from  the  law  of  equal 
freedom.  We  see  that  the  maintenance  of  this 
right  necessarily  forbids  private  property  in 
land.  On  examination  all  existing  titles  to  such 
property  turn  out  to  be  invalid,  those  founded 
on  reclamation,  inclusive.  It  appears  that  not 
even  an  equal  apportionment  of  the  earth 
amongst  its  inhabitants  could  generate  a 
legitimate  proprietorship.  We  find  that  if 
pushed  to  its  ultimate  consequences,  a  claim  to 
exclusive  possession  of  the  soil  involves  a  land- 
owning despotism.^    We  further  find  that  such 


*  Here  it  is  worth  while  to  remark  that  it  is  only  an 
abstract  and  purely  theoretical  proposition  that  can  "  be 


Land  193 

a  claim  is  constantly  denied  by  the  enactment 
of  our  Legislature.^  And  we  find  lastly,  that 
the  theory  of  the  co-heirship  of  all  men  to  the 
soil,  is  consistent  with  the  highest  civilization; 
and  that,  hovv'ever  difficult  it  may  be  to  embody 
that  theory  in  fact  equity  sternly  commands  it 
to  be  done. 

♦    ♦    * 

'\\niat  is  the  remedy  Spencer  proposed? 
Ownership  by  the  Nation.  / 

The  change  required  would  simply  be  a  change  of 
landlords.  Separate  ownerships  would  merge  into 
the  joint-stock  ownership  of  the  public.  Instead  of 
being  in  the  possession  of  individuals,  the  country 
would  be  held  by  the  great  corporate  body  —  society. 

pushed  to  its  ultimate  consequences."  As  for  instance, 
Henry  George's  proposition  that  personal  property  rights 
are  vested  by  natural  law  can  be  pushed  to  the  most  ex- 
treme and  absurd  conclusions.  The  practical  proposition 
that  all  property  rights  are  in  no  sense  abstract,  but 
wholly  the  result  of  human  and  social  relations,  develop- 
ing and  changing,  with  changing  social  conditions,  and 
at  all  times  subject  to  the  will  of  the  community,  cannot 
be  pushed  to  extreme  or  absurd  conclusions. 

'  Here  Spencer  recognizes  the  practical  fact  that  private 
property  in  land  is  nowhere  absolute,  that  the  everyman's 
right  to  real  estate  is  at  all  times  subordinate  to  the  will 
and  welfare  of  the  community.  Hence  the  logical  infer- 
ence is  that  the  community  considers  it  to  be  for  the  best 
interests  of  all  to  maintain  and  protect  precisely  the  rights 
—  both  real  and  personal  —  the  law  now  recognizes. 


194  Property 

Instead  of  leasing  his  acres  from  an  isolated   pro- 
prietor, the  farmer  would  lease  them  from  the  nation. 

Exceedingly  simple  in  statement,  but  in 
practice ! 

One  objection  is  sufficient  to  topple  the  house 
of  illogical  cards. 

His  conclusion  and  final  proposition  is  to 
vest  the  ownership  in  the  nation,  but  all  his 
premises  and  reasoning  require  the  ownership 
to  be  in  mankind  irrespective  of  tribes  and 
nations. 

The  land-o\vners  of  England  are  deprived  of 
their  titles  and  required  to  lease  from  the  state. 
How  about  the  land-owners  of  Scotland  and 
Ireland?  of  Denmark,  Sweden,  Norway,  the 
Continent,  and  so  on? 

Their  rights  to  enjoy  the  soil  of  England  are 
as  sacred,  as  "  natural,"  as  those  of  the  people 
of  England,  and  they  may  object  to  the  terms 
dictated  by  the  new  landlord  —  the  English 
government,  just  as  Japanese  and  Chinese 
object  to  the  exclusion  and  other  restrictive 
immigration  laws  made  by  the  American  gov- 
ernments, federal  and  state. 

When  we  begin  to  talk  about  the  individual's 


Lnncl  195 

inalienable  rights  to  access  to  the  soil,  to  light, 
air,  etc.,  one  cannot  see  why  those  rights  should 
either  end  or  change  at  the  imaginary  geo- 
graphical line  that  divides  one  nation  from 
another. 

Suppose  each  nation  on  the  Continent  takes 
title  to  all  lands  within  its  boundaries,  and 
does  with  those  lands  as  it  pleases,  the  result 
would  be  as  many  different  landlords  as  there 
are  nations. 

Theoretically  just  and  universal  distribution 
and  enjojTiient  of  land  privileges  would  be  as 
far  off  as  ever. 

George's  famous  single-tax  plan  is  directly 
suggested  in  the  paragraph  from  Social  Statics 
before  quoted. 

•>    ♦    ♦ 

Happily  for  George  his  single-tax  propo- 
sition does  not  stand  or  fall  by  his  long  argu- 
ment against  ownership  of  land.    He  says : 

I  do  not  propose  either  to  purchase  or  to  confiscate 
private  property  in  land.  The  first  would  be  unjust ; 
the  second,  needless.  Let  the  individuals  who  now 
hold  it  still  retain,  if  they  want  to,  possession  of  what 
they  are  pleased  to  call  their  land.  Let  them  continue 
to  call  it  their  land.     Let   them  buy  and  sell,  and 


198  Property 

/bequeath  and  devise  it.  We  may  safely  leave  them 
the  shell,  if  we  take  the  kernel.  It  is  not  necessary  to 
confiscate  land;  it  is  only  necessary  to  confiscate  rent. 
Nor  to  take  rent  for  public  uses  is  it  necessary  that 
the  state  should  bother  with  the  letting  of  lands,  and 
assume  the  chances  of  favoritism,  collusion,  and 
corruption  that  might  involve.  It  is  not  necessary 
that  any  new  machinery  should  be  created.  The 
machinery  already  exists.  Instead  of  extending  it,  all 
we  have  to  do  is  to  simplify  and  reduce  it.  By  leav- 
ing to  land-owners  a  percentage  of  rent  which  would 
probably  be  much  less  than  the  cost  and  loss  involved 
in  attempting  to  rent  lands  through  state  agency,  and 
by  making  use  of  this  existing  machinery,  we  may 
without  jar  or  shock,  assert  the  common  right  to  land 
by  taking  rent  for  public  uses.^ 
♦     ♦     ♦ 

Rather  a  lame  and  impotent  conclusion  after 
the  eloquent  demonstration  of  the  iniquity  and 
fundamental  injustice  of  any  private  owner- 
ship of  natural  resources. 

Private  ownership  is  to  continue ! 

Why? 

Because  the  state  could  not  fairly,  honestly, 
and  efficiently  act  as  landlord ! 

But  the  state  is  to  go  in  partnership  with  the 
land-owner  and  take  all  of  the  profits  except 

^Progress  and  Poverty,  Book  viii,  chap.  ii. 


( 


Land  197 

just  sufficient  to  induce  the  landlord  to  run  the 
business  —  Pv  sort  of  partnership  that  seldom 
means  lower  rents  for  the  tenant;  any  more 
than  heavy  income  and  profit  taxes  mean  that 
those  who  pay  them  will  make  lower  prices  on 
their  goods  or  services. 

***    *«♦     ♦♦♦ 

Everything  that  can  be  said  in  favor  of  a 
single-tax  on  land  can  be  said  without  raising 
a  question  regarding  the  justice  or  injustice  of 
private  ownership  of  land.  Just  as  the  ques- 
tion of  a  tax  on  personal  property,  or  a  tax 
upon  incomes  does  not  necessarily,  or  even 
incidentally,  involve  any  question  regarding 
the  right  of  a  man  to  own  property  at  all,  or 
his  right  to  earn  an  income. 

It  is,  of  course,  possible  to  discuss  all  these 
questions  in  one  volume  but  the  attempt  would 
not  prove  very  helpful  toward  the  answering 
of  anyone. 

As  a  revenue  proposition  the  writer  has  a 
great  deal  of  sympathy  with  the  single-tax  plan 
—  almost  any  definite  plan  would  be  an 
improvement  upon  the  hodge-podge  of  revenue 
laws,  state  and  federal,  in  force  in  this  country. 


198  Property 

And  George  is  right  in  urging  a  sclieme  of 
taxation  on  land  so  arranged  as  to  discourage 
the  holding  of  vacant  and  undeveloped  prop- 
erties to  the  exclusion  of  others  to  reap  the 
unearned  increment. 

Not  only  tax  laws,  but  inheritance  laws,  and 
laws  governing  conveyances  can  be  used  to  dis- 
courage, even  prevent  altogether,  the  accumu- 
lation of  fortunes  in  unoccupied  land. 

Property  in  land — i.  e.  individual  control  of 

land  and  natural  resources,  need  not  be  abol- 

'■    ished  altogether.  The  end  in  view  is  a  maximum 

of  welfare  to  the  community  at  the  least  cost 

and  inconvenience.^ 

♦    ♦     ♦ 

The  only  argument  that  can  be  logically 
urged  in  favor  of  broad,  private,  or  corporate 
ownership  —  control  —  of  land  and  natural  re- 
sources is  that  development  follows  more 
rapidly. 

Generally  speaking  this  is  true.  Limit  the 
;\  ownership  and  the  incentive  is  gone. 

But  it  is  also  true  that  private  ownership 
may  be  carried  so  far  that  the  individual  is 
encouraged  to   gamble   on  the  future,  to   sit 


Land 199 

**  tight"  and  wait  for  the  community  and 
others  to  make  his  land  valuable;  this  sort  of 
ownership  should  be  restricted  to  the  vanish- 
ing point. 

Needless  to  say  it  is  difficult  to  draw  the  line, 
and  still  more  difficult  to  devise  the  ways  and 
means,  but  the  point  we  are  endeavoring  to 
drive  home  is  that  nothing  can  be  done  until 
there  is  a  much  clearer  understanding  of  the 
so-called  ''rights"  of  the  individual  and  the 
real  rights  of  the  community. 
♦    ♦     ♦ 

The  one  great  objection  to  abolishing  private 
ownership  and  control  of  landed  property  in 
any  or  all  of  its  forms  in  favor  of  the  state,  is 
the  poor  and  inefficient  use  the  state  makes  of 
its  opportunities. 

State  ownership  is  so  wasteful,  so  inefficient, 
and  often  so  corrupt  that  most  thinking — and 
instinctively  many  unthinking — men  are  op- 
posed to  it.^l  "^ 

In  short  the  evils  of  private  OAvmeiship  are 
believed  to  be  less  than  those  of  the  state.  The 
individual  may  make  a  poor  landlord,  but  it  is 
notorious  that  the  state  or  city  makes  a  worse 


200  Property 

so  far  as  getting  real  value  out  of  the  property 
for  the  community.  The  state  either  does 
nothing  or  is  badly  victimized  in  trying  to 
utilize  its  properties. 

All  this  may  change  as  people  think  more  on 
the  subject,  and  there  can  be  no  change  for  the 
better  until  they  do  think  more. 

When  they  think  long  enough  and  hard 
enough  either  to  abolish  or  greatly  curtail  pri- 
vate oA\Tiership  of  land,  they  will  probably  think 
far  enough  to  perfect  the  machinery  of  state 
control. 

♦>    ♦     ♦ 

At  all  events  the  limitation  of  private  owner- 
ship of  land  —  especially  unused  land — would 
probably  go  further  toward  pacifying  mankind 
and  allaying  discontent  than  any  other  one 
social  or  economic  reform. 

The  means  ivherehy  would  require  a  small 
volume ;  this  book  must  be  content  to  point  out 
the  logical  whereto  —  the  inevitable  end. 


X 

LUXURIES 

Luxuries  —  a  word  in  everyday  use,  yet  ex- 
ceedingly difficult  to  define. 

What  are  luxuries  to  one  age  are  necessaries 
to  another ;  what  are  luxuries  to  one  man,  one 
people,  one  race,  are  necessaries  to  another. 

All  such  statements  are  little  more  than 
familiar  truisms.  They  do  not  help  us  on  our 
way  save  as  they  demonstrate  the  impossibility 
of  an}^  hard  and  fast  definition  of  the  term.^ 

Every  nation  and  every  age  considers  everything 
as  superfluous  which  they  do  not  habitually  use. 
Holinshed,  in  his  chronicle,  groans  over  the  ultra- 
refinement  of  the  English  in  his  times  (1577),  because 
they  were  everywhere  introducing  chimneys,  instead 
of  allowing  the  smoke  to  escape  through  cracks  in 
the  roof,  and  were  using  vessels  of  earthenware,  or 
even  of  tin,  in  place  of  the  old  wooden  bowls  and  jugs. 
Another  author  of  the  same  period,  Slaney,  "  On 
Rural  Expenditure,"  is  indignant  that  oak  should  be 
used  in  building,  instead  of  willow.  "  Formerly,"  he 
exclaims,  "  houses  were  of  willow  and  men  were  of 

*  The  Century  dictionary  quotes  Cowper's  lines : 
First  Necessity  invented  stools, 
Convenience  next  suggested  elbow  chairs, 
And  Luxury  th'  accomplish'd  Sofa  last. 

201 


202  Property 

oak,  now-a-days,  houses  are  of  oak  and  men  are  of 
willow. ' '  In  the  IMiddle  Ages  linen  was  so  rare  that 
princesses  would  make  a  present  of  a  shirt  to  their 
betrothed,  and  it  was  the  general  custom  on  going  to 
bed  to  take  off  even  this  first  garment.  It  would  be 
considered  today  the  very  extreme  of  misery  to  be 
reduced  to  dispensing  with  this.  When  flowered  cot- 
tons and  muslins  first  were  introduced  from  India, 
wealthy  ladies  only  could  wear  them,  now,  working- 
men's  wives  despise  them.^ 


As  the  luxuries  of  one  generation  become  the 
comforts  and  necessities  of  the  next,  new  lux- 
uries are  devised,  and  so  on  from  generation 
to  generation.  Each  feverishly  seeks  new 
things,  new  pleasures,  new  sensations,  and  these 
new  things  and  pleasures  are  luxuries  so  long 
as  they  are  novel  and  comparatively  rare  — 
that  is  enjoyed  by  the  comparatively  few. 

This  demand  for  the  new,  the  novel,  the  rare, 
the  unusual,  is  inherent  in  human  nature.  It  is 
closely  allied  to,  or  springs  from  curiosity. 

It  is  part  of  the  primitive  love  of  ostentation, 
the  desire  to  excel  others  in  strength,  achieve- 

'  Emile  de  Laveleye,  Luxury,  pp.  5  and  6.  This  little 
book  or  essay,  is  more  of  a  sermon  than  discussion. 


Luxuries  203 

ment,  adornment.  It  is  part  of  tlie  natural 
desire  to  excel  in  the  eyes  of  the  opposite  sex, 
to  do  things,  wear  things,  have  things  that  will 
make  the  opposite  sex  take  notice  and  admire. 

"SVhen  we  talk  of  the  '*  love  of  luxury,"  that 
is  only  superficially  correct.  The  true  phrase 
would  be  the  "love  of  the  admiration  —  or 
envy,  or  notoriety — that  luxuries  and  luxuri- 
ous living  arouse." 

It  is  idle  to  condemn  luxuries  or  luxurious 
living  as  such.  If  luxuries  and  luxurious  liv- 
ing are  wrong  then  we  must  seek  and  eradicate 
the  instincts  and  desires  that  create  luxuries. 

When  Vv^e  seek  these  instincts  and  desires  we 
find  we  are  dealing  with  the  most  fundamental 
impulses  of  human  nature,  with  the  impulses 
that  perpetuate  the  species  and  lead  to  all 
progress. 

The  impulse  to  excel  is  one  of  the  most  valu- 
able to  the  race.  It  may  appear  ruthless  in 
some  of  its  consequences,  but  without  it  there 
can  be  no  progress  of  any  kind  —  spiritual  or 
material. 

The  impulse  to  out-do,  out-shine,  out-talk, 
out-sing,    out-show,    out-eat,    out-dress,    out- 


204  Property 

noise,  out-anything,  is  simply  the  impulse  to 
excel  in  its  many  guises. 

How  tame,  stagnant,  and  impossible  the 
world  w^ould  be  if  no  man  had  any  desire  to  do 
things  or  have  things  better  than  his  neighbor. 

♦    ♦    •> 

It  will  be  urged  that  there  are  good  ways  and 
bad  v.^ays  of  outdoing.  Granted,  but  w^hether 
a  man  outdoes,  or  outowns  his  neighbor  in  a 
good  way  or  a  bad  way  the  inequality  in  pos- 
session or  enjoyment  is  there  just  the  same; 
the  luxury  is,  so  to  speak,  statistically  the  same. 

So  far  as  the  term  is  concerned  the  man  who 
pays  five  thousand  dollars  for  a  fine  painting, 
or  toward  the  support  of  a  fine  orchestra  in- 
dulges in  a  ''  luxury  "  as  much  as  the  man  who 
spends  the  same  amount  for  the  hideous  deco- 
ration of  a  room,  or  the  support  of  a  garish 
and  vicious  burlesque  show,  or  upon  a  banquet, 
or  dance. 

In  effect  upon  the  community  there  is  all  the 
difference  in  the  world  between  the  man  who, 
with  sure  taste,  gathers  about  him  beautiful 
things,  and  the  man  who  spends  his  mofiey  fool- 


**^. 


Lujcurics  205 

ishly  and  lavishly  on  things  that  are  not  elevat- 
ing. But  who  is  to  be  the  judge,  who  is  to  draw 
the  line?  More  people  may  —  usually  do  — 
actually  enjoy  the  poor  painting,  the  poor 
music,  than  the  good.  The  poor,  the  cheap,  the 
ostentatious  may  actually  lift  the  masses  more 
than  the  fine,  because  the  appeal  is  more 
elemental. 

The  big,  showy,  tinselly  theatrical  produc- 
tion may  give  real  pleasure  to  hundreds  of 
thousands,  where  the  fine  fails  to  attract  more 
than  a  few. 

It  is  easy  enough  to  condemn  luxuries,  but  it 
is  not  so  easy  to  designate  just  what  luxuries 
any  particular  people  at  any  particular  time 
should  dispense  with. 

It  would  be  difficult  to  take  any  people  in 
any  particular  historical  period  and  designate 
those  luxuries  they  might  have  dispensed  with 
to  our  benefit. 

Athens  and  Rome  —  especially  Rome — ^in- 
dulged in  excesses  in  living  no  man  would 
attempt  to  justify,  but  aside  from  some  of  the 
famous  excesses,  stories  of  which  have  come 
down  to  us,  the  life  of  the  Romans  generally 


206  Property 

set  high  standards  as  compared  with  the  lives 
and  customs  of  peoples  about  them. 

With  all  their  excesses  and  shortcomings  the 
modern   world   is   better   off   for   the   human 
experiment  of  Athens,  Rome,  Paris,  London. 
♦    ♦     ♦ 

So  much  for  the  reason,  for  the  justification 
of  luxuries  generally.  We  will  now  return  to 
our  line  of  argument,  to  the  statement  that  a 
man  may  be  a  millionaire  in  luxuries,  as  in 
land. 

And  it  is  because  an  individual  may  possess 
and  actually  control  to  the  exclusion  —  if  he  so 
desires  —  of  others  thousands  and  millions  of 
dollars  worth  of  rare  and  beautiful — also  of 
rare  and  ugly,  things  that  the  masses  murmur.^ 

Much  of  social  unrest  and  discontent,  of  class 
envy  and  hatred,  is  due  to  the  distribution  and 
enjoyment  of  so-called  luxuries  —  in  short  to 
what  may  be  summed  up  as  luxurious  living. 

It  does  not  matter  much  to  the  masses  who 
have  little  that  a  man  has  paper  w^ealth  to  the 

*  We  have  pointed  out  —  page  180,  that  men  owning 
luxuries  do  not,  as  a  matter  of  fact,  hold  them  to  the 
exclusion  of  others.  In  a  profound  sense  a  luxury  ceases 
to  be  a  luxury  if  others  do  not  view  it  as  such. 


Luxuries  207 

extent  of  a  million  or  a  hundred  millions,  pro- 
viding they  see  him  working  hard  and  living 
simply. 

It  is  when  he  begins  to  realize  on  a  part  of 
his  paper  wealth  and  build  a  costly  home,  buy 
costly  things,  and  indulge  expensive  tastes  that 
the  multitude  takes  notice  and  murmurs,  and 
all  the  more  so  if  his  lavish  expenditures  take 
the  form  of  foolish  or  vicious  extravagances. 
He  may  be  spending  but  a  fraction  of  his  in- 
come, leaving  the  balance  and  the  entire  prin- 
cipal in  productive  pursuits,  yet  he  arouses  dis- 
content, because  he  accentuates  the  great 
inequalities  in  the  actual  enjoyment  of  wealth. 

It  is  safe  to  say  that  if  every  rich  man,  when 
he  came  to  assert  his  ownership  of  any  part  of 
his  fortune  by  spending  it  for  his  own  gratifica- 
tion, spent  it  only  on  objects  the  public  approved, 
there  would  be  very  little  discontent  over  sta- 
tistical inequalities  in  the  distribution  of 
wealth,  however  great  they  might  be. 

♦>    ♦    ♦ 

A  superficial  view  of  the  way  ci^^lized  peoples 
live  leads  irresistibly  to  the  conclusion  that  in 


208  Property 

their  actual  possession  and  enjoyment  of  things 
and  services  some  classes  and  many  individuals 
have  altogether  too  much  as  compared  with 
others  whose  lives,  surroundings  and  enjoy- 
ments are  exceedingly  poor  and  mean. 

This  superficial  impression  is  so  strong  that 
many  earnest  men  and  women  become  violent 
social  reformers,  not  a  few  advocating  a  the- 
oretically pure  commxmism  in  which  all  would 
be  on  an  equal  footing  as  regards  things  con- 
sumed and  enjoyed. 

But  may  there  not  be  serious  practical  diffi- 
culties in  the  way  of  attaining  anything  like 
that  equality? 

Is  it  not  possible  that  in  the  utopian  or  com- 
munistic community  the  inequalities  in  con- 
sumption and  enjojTnent  would  still  be  great? 

Exact  equality  in  the  distribution  of  com- 
forts and  luxuries  is  absolutely  unattainable, 
either  practically  or  theoretically. 

Hence  the  differences  in  the  distribution  of 
comforts  and  luxuries  between  the  most  mil- 
lennial state  the  mind  of  man  can  picture,  and 
present  conditions  of  private  ownership  are 
differences   in   degree    and   not   in   kind;   the 


Luxuries  209 


inequalities  are  there,  but  perhaps  not  so  ac- 
centuated—  perhaps  more  so  in  some  respects. 

<s»    ♦!♦    •;<» 

Conceding  at  the  outset  that  the  lives  of  a 
certain  percentage  of  every  community  are 
depressingly  lacking  in  comforts,  to  say  nothing 
of  luxuries,  the  practical  question  is  how  to  pro- 
vide the  things  and  enjoyments  needed  and 
induce  those  ivlio  lack  them  to  use  them. 

The  health  officer,  the  expert,  the  social 
reformer,  may  feel  sure  of  the  need  of  extensive 
improvements  in  food,  housing,  modes  of  liv- 
ing, etc.,  but  unless  the  class  to  be  lifted  can  be 
induced  to  help  lift  itself,  little  can  be  done. 

It  is  easy  to  tax  those  who  have  to  provide 
everything  necessary  for  those  who  have  not  — 
just  as  easy  to  get  the  money  in  this  way  as  to 
take  it  from  the  common  fund  in  a  communism. 
The  trouble  begins  when  the  attempt  is  made 
to  arbitrarily  change  the  habits  of  the  mass  to 
be  affected. 

♦    *    ♦ 

The  average  American  workingman  insists 
upon  comforts  and  conveniences  the  European 


2io  Property 

wage-earner  not  only  knows  nothing  of,  but 
cares  nothing  for. 

Landlords  of  tenement  houses  in  this  country 
often  have  no  end  of  trouble  with  foreign  ten- 
ants who  use  the  bathtubs  to  hold  coal  and 
refuse,  for  any  and  every  purpose  except  for 
bathing. 

Many  and  costly  are  the  disappointments  of 
builders  of  model  houses  and  tenements  be- 
cause those  who  live  in  them  treat  them  as 
hovels.  It  takes  generations  to  change  the 
habits  of  peoples,  to  make  them  cleaner  and 
more  sanitary. 

People  indulge  in  luxuries  before  they  appre- 
ciate them  or  know  how  to  use  them. 

The  average  American  passes  through  the 
''  East  Side  "  in  New  York  on  a  hot  summer 
day  or  evening  and  wonders  how  people  can 
live  so,  seemingly  on  the  streets  or  packed  in 
and  sweltering. 

The  average  social  reformer  is  for  imme- 
diately uplifting  the  entire  mass  by  law.  The 
dreamy  communist  would  remedy  the  situation 
by  some  more  or  less  violent  redistribution  of 
wealth  so  the  "  East  Side  "  would  have  enough 


Luxuries  211 

to  buy  the  things  it  ought  to  have  — ' '  ought  to 
have  "  in  the  average  American  mind. 

Now,  it  may  be  well  within  the  truth  to  say 
that  the  *'  East  Side  "  as  a  whole  earns  and 
makes  enough  money  to  live  quite  as  com- 
fortably as  the  average  American  worker  —  if 
not  better,  but  the  "  East  Side  "  lives  as  it  has 
lived  for  generations  in  the  Old  Country  and 
in  this,  according  to  its  many  racial  and  na- 
tional characteristics.  AMien  it  wants  to  live 
better  it  moves  into  other  neighborhoods  and 
other  cities  —  often,  however,  carrying  strong 
flavors  of  the  "  East  Side  "  mth  it. 

The  '^  East  Side  "  is  perhaps  the  most  inde- 
pendent and  self-reliant  section  of  New  York, 
it  is  quite  sufficient  unto  itself  and  when  it 
wants  more  bedrooms  and  bathtubs  it  can 
afford  them. 

The  same  may  be  said  of  the  workers  in  the 
Chicago  Stock  Yards  district  and  in  the  great 
steel  mills  of  the  country.  Year  in  and  out 
they  earn  enough  to  live  in  far  more  com- 
fortable rooms  and  houses  than  those  we  see 
surrounding  those  great  industries. 

Gaze  from  a  train  at  the  average  American 


212  Property 

farmhouse,  bare  of  trees,  shade,  flowers,  lawii ; 
fences  often  half  down,  houses  and  out-build- 
ings out  of  repair,  steps  rotting,  porches 
sagging,  lack  of  paint,  care,  and  pride  in  ap- 
pearance. Seldom  a  stone,  brick,  cement  or 
board  walk  to  roadway  or  barns,  just  paths, 
muddy  with  every  rain. 

The  inside  corresponds  to  the  out. 

There  are  notable  and  conspicuous  excep- 
tions here  and  there  —  smart,  attractive  houses 
that  one  would  like  to  live  in  in  summer  and 
winter  but  they  are  conspicuous  because  they 
are  so  few. 

This  condition  is  not  due  to  poverty  but  to 
indifference.  Many  of  the  conditions  could  be 
helped  by  just  a  little  effort,  and  practically 
no  expense,  and  any^vay  the  average  farmer 
can  afford  what  it  would  cost  to  keep  his  home 
incomparably  more  attractive  and  livable. 

The  trouble  is  he  has  always  lived  in  such 
houses  and  gives  the  matter  little  or  no 
thought.  Just  as  he  allows  expensive 
machines  to  rust  in  fields  and  barnyards. 

He  will  buy  an  automobile  before  he  will  fix 
up  his  house.    He  can  do  both,  and  the  man 


Luxuries  213 

who  has  a  nice  attractive  home  is  sure  to  have 
an  automobile  and  keep  it  clean  and  in  work- 
ing order  at  less  expense  than  the  man  who 
has  a  neglected  home. 

♦      •!♦      ♦ 

No  theory  of  communism,  no  ntopia  has  ever 
been  suggested  that  did  not  contemplate  the 
creation  of  practically  all  the  luxuries  now 
enjoyed  by  mankind,  but  the  ownership  was 
to  be  in  the  public. 

All  the  illusive  attractiveness,  all  the  iri- 
descent hues  of  the  communistic  dream  center 
about  the  luxuries  the  community  will  create 
and  maintain  for  the  enjojTnent  of  all. 

But  while  the  title  to  luxuries  is  to  be  in  the 
state  rather  than  in  the  individual,  individuals 
— though  appointed  by  the  state — v/ill  neces- 
sarily have  the  care  and  custody,  and  control 
of  all  luxuries,  and  they  will  necessarily  be 
housed  and  restricted  very  much  as  they  are 
now,  not  in  privately  owned  buildings,  but  still 
in  buildings  to  Vv^hich  only  a  limited  number  of 
the  entire  population  can  have  access.^ 


*  Conditions  in  Russia  under  the  Bolsheviki  are  in  point. 
No  end  of  money  is  spent  to  dazzle  and  amuse  the  masses 


214  Property 

Suppose  this  country  by  a  sudden  revolu- 
tion became,  overnight,  a  pure  conununism  and 
it  were  decreed  that  every  private  house  and 
building  containing  any  luxury  the  people 
should  enjoy  should  be  open  to  the  public  cer- 
tain hours  each  day;  at  first  the  public  might 
rush  to  take  advantage  of  the  new  privilege, 

in  the  large  cities.  There  is  a  Commissariat  of  Educa- 
tion and  Art,  headed  by  Lunacharsky.  An  eyewitness 
writes  of  what  he  does  in  Moscow  —  more  than  the  Czar, 
or  old  regime,  ever  did: 

"  In  the  realm  of  art,  on  the  other  hand,  which  is,  or 
should  be,  far  removed  from  the  torn  and  troubled  region 
of  politics,  Lunacharsky  has  initiated  free  entertainments, 
theaters,  operatic  performances,  and  cinematographs  for 
the  working  classes  and  scholastic  institutions.  The  the- 
aters are  thus  kept  thoroughly  occupied.  Very  few  new 
works  are  performed,  for  the  members  of  the  theatrical 
profession  perform  their  duties  very  much  like  those  other 
members  of  the  intelligentsia  who  contribute  to  the  main- 
tenance of  the  Bolshevik  regime  by  working  in  govern- 
ment institutions.  They  work  automatically,  by  force  of 
inertia,  and  because  they  must  be  engaged  in  some  oc- 
cupation to  earn  a  living.  The  repertoire,  both  of  theater 
and  opera,  consequently  consists  of  the  same  old  classical 
rut  of  the  last  fifteen  or  twenty  years.  The  few  new 
works  which  are  produced  are  chiefly  of  a  revolutionary, 
and  consequently  propagandist  character,  and  are  per- 
formed for  this  reason  rather  than  for  any  intrinsic 
value  of  their  own.  Among  this  number  are  some  of 
Lunacharsky's  own  plays. 

"  The  Bolsheviki  fully  realize  the  value  of  the  theater  as 
an  instrument  of  propaganda  to  popularize  their  regime. 
They  keep  the  theaters  open  at  all  costs,  and  with  this 


Luxuries  215 

but  after  a  time  probably  few  more  than  now 
would  visit  what  bad  been  private  collections. 
The  state  would  assume  the  care  and  expense 
of  them  with  little  compensating  advantage, 
and  in  time  the  production  of  luxuries,  of 
ever5i:hing  that  tends  to  make  life  more  beau- 
end  in  view  give  very  advantageous  terms  to  the  theatrical 
personnel.  The  latter,  besides  being  better  paid,  receive 
larger  food  rations  than  the  general  population.  Actors 
and  musicians  are  also  exempted  from  military  service 
and  these  two  factors  serve  to  make  this  category  of  the 
population  readily  submit  to  the  Bolsheviki  regime,  which 
thus  affects  them  but  slightly. 

"  The  conservatoires  continue  to  function,  but  the  aboli- 
tion of  entrance  examinations,  all  tests,  the  diploma,  and, 
indeed,  of  any  educational  norm,  has  sadly  reduced  the 
standard  of  musical  education  in  the  conservatoires  of 
Petrograd  and  Moscow,  which  v/ere  form.erly  of  such  high 
standing.  The  object  of  the  changes  is  said  to  be  to 
proletarianize  these  institutions.  Education  in  the  con- 
servatoires and  universities  is  now  universally  free,  as 
was  often  the  case  under  the  old  regime  for  indigent  stu- 
dents. Glazunoff  is  still  director  of  the  Petrograd  Con- 
servatoire, but  is  producing  no  new  work.  Composition, 
except  of  topical  revolutionary  music,  is  at  a  standstill. 

**  The  administration  of  all  m.usical  affairs  under  the 
Commissariat  of  Education  and  Art  is  in  the  hands  of 
Arthur  Lourier,  a  pianist  of  extreme  modern  tendencies 
who  was  unknown  before  the  Bolshevik  revolution.  Luna- 
charsky  has  repeatedly  offered  this  post  to  the  popular 
musician  and  conductor,  Alexander  Siloti.  I  was  unable 
to  meet  Siloti  in  Petrograd,  but  I  was  told  he  has  per- 
sistently refused  to  accept  any  post  under  the  Bolshevik 
regime." 


216  Property 

tiful,   would   fall    off;    the    community   would 

become  more  and  more  dreary  and  monotonous. 

♦    ♦     ♦ 

Again  attention  must  be  called  to  the  fact 
that  however  great  the  efforts  of  the  com- 
munistic state  to  enable  all  to  enjoy  equal 
advantages,  in  the  very  nature  of  things  all 
could  not. 

If  luxuries  or  advantages  of  any  kind  are 
permitted  they  will  be  m^ore  convenient  for 
some  of  the  people  than  for  others. 

Natural  and  artificial  advantages  will  enable 
some  to  eat  better,  dress  better,  live  better  than 
others.  Unless  we  are  to  picture  in  our  mind's 
eye  the  people  of  the  United  States — for 
instance  —  living  in  community  buildings,  every 
one  alike  in  size,  comforts,  conveniences;  and 
all  eating  practically  similar  meals;  and  all 
dressing  practically  alike;  and  all  having 
the  same  luxuries  such  as  they  are;  the 
only  alternative  is  to  picture  them  very  much 
as  they  are  now  but  with  some  of  the  inequal- 
ities of  the  present  softened. 

The  truth  is  every  Utopian,  every  com- 
munistic dreamer,  has  in  mind  cities,  public 


Luxuries  217 

buildings,  houses,  parks,  improvements,  etc., 
etc.,  as  they  now  are,  only  finer,  but  in  some 
mysterious  way  all  the  people  are  to  have  equal 
enjojonent  of  and  access  to  these  advantages. 
That  is  a  physical,  as  well  as  a  theoretical  im- 
possibility. 

♦    ♦    «> 

To  return  to  the  main  line  of  our  argument 
after  this  digression  regarding  luxuries  gen- 
erally. 

The  actual  distribution  of  wealth  is  measured 
by  consumption  —  using  the  word  in  a  large 
sense,  the  sense  of  withdrawal  of  wealth  for 
personal  support  and  gratification. 

The  actual  appropriation  of  wealth  to  the 
exclusion  of  others  begins  with  (1)  the  food 
we  eat;  (2)  the  clotlies  we  wear;  (3)  the  houses 
we  live  in. 

To  these  three  prime  necessities  must  be 
added  (4)  the  luxuries  we  indulge  in. 
Luxuries  enter  into  each  of  the  three  first  items 
and  also  constitute  a  class  by  themselves. 

Only  savages  far  down  in  the  scale  of  devel- 
opment eat  only  the  raw  foods  nature  pro- 
vides,  or  wear  only   such   coverings   as   are 


218  Property 

absolutely  essential  to  preserve  life,  or  live  in 
caves  and  Avoods  with  no  attempts  at  adapta- 
tion for  comfort  or  adornment  for  pleasure. 

In  fact  no  such  primitive  savages  are  knoA\Ti. 
The  most  degraded  prepare  their  food,  cover- 
ings, and  shelters  with  the  exi3enditure  of  con- 
siderable labor  for  physical,  religious,  cere- 
monial gratifications,  and  all  such  gratifica- 
tions partake  of  the  nature  of  luxuries,  in  pre- 
cisely the  sense  a  banquet  or  a  cathedral  is  a 
luxury. 

It  is  impossible  to  probe  the  term  "  luxury  '* 
without  seeing  how  closely  it  is  allied  to  the 
term  "necessity."  To  a  profoundly  religious 
people  a  church  or  a  cathedral  is  the  most 
necessary  thing  they  know,  essential  to  their 
spiritual  life  on  earth  and  their  eternal  salva- 
tion. To  a  profoundly  ceremonial  people  robes 
of  state,  a  crown,  a  throne,  a  palace  are  neces- 
sary to  their  national  existence,  they  are  sym- 
bols of  authority,  of  the  state  itself,  just  as 
the  elaborate  paraphernalia  of  Freemasonry 
are  essential  to  its  activities. 
♦    ♦    ♦ 

As  regards  food  the  inequalities  are  not  and 


Luxuries  219 


cannot  be  very  great  between  man  and  man, 
even  though  one  man  drinks  only  water  and 
another  drinks  the  most  expensive  wines,  one 
eats  very  plain  food  and  another  very  rich. 

Those  inequalities  in  actual  consumption 
trouble  very  few — except  the  individuals 
themselves  who  eat  and  drink  too  much. 

As  a  matter  of  fact  most  millionaires  live 
rather  simply.  Experience  teaches  them  that 
they  work  best  on  simple  foods  and  no  stimu- 
lants. 

However  excesses  in  eating  and  drinking  are 
fairly  well  distributed  through  all  classes,  from 
the  humblest  wage-earner  to  the  capitalist. 
One  of  the  greatest  sinners  in  extravagant  eat- 
ing and  drinking  is  the  public  itself  in  its  pub- 
lic banquets  and  entertainments. 

The  point  is,  that  whatever  these  excesses 
may  be  in  the  consumption  of  food  they  are 
not  of  revolutionary  or  even  disquieting  mag- 
nitude. 

♦I*    **♦    *♦♦ 

As  regards  the  second  item  clothes,  in- 
equalities in  actual  consumption  are  greater, 
for  the  simple  reasons  that  clothes  can  be  kept 


220  Property 

longer  than  food  and  tliey  lend  themselves  bet- 
ter to  display. 

Here  again  the  greatest  inequalities  in 
clothes  and  personal  adornment  are  found  in 
community-oivned  uniforms,  and  robes  and  cos- 
tumes for  public  and  ceremonial  occasions. 

Individuals,  especially  women,  may  have  far 
more  clothes  than  they  need  or  can  use,  and 
in  this  respect  the  inequalities  are  marked,  but 
still  so  insignificant  as  to  occasion  little  dis- 
content. The  conmiunist  is  against  the  mil- 
lionaire on  account  of  his  nominal,  his  paper 
wealth  not  because  he  has  twenty  suits  of 
clothes. 

On  the  contrary  the  people,  the  masses,  like 
to  see  men,  and  more  particularly  women, 
attractively  dressed,  just  as  they  like  to  gaze 
in  shop  windows  and  watch  parades  and 
spectacles.  There  may  be  a  good  deal  of  envy 
in  the  breasts  of  some  individuals,  but  even  that 
envy  has  its  origin  in  the  desire  to  be  in- 
dividually as  gorgeously  clothed,  and  not  at 
all  in  a  desire  that  the  entire  community  dress 
alike  on  one  dead  level  like  Quakers,  nuns,  and 
priests.    And  in  a  sense  it  is  this  very  envy 


Luxuries  221 

that  spurs  the  envious  person  to  greater  e:fforts 
so  he  or  she  may  dress  as  iineiy. 

♦    ♦    ♦ 

Much  of  what  has  been  said  regarding 
clothes,  might  be  repeated  with  equal  force 
regarding  the  third  item,  homes. 

Homes  are  more  perm^anent  than  clothes. 
Being  more  permanent  and  not  being  limited 
to  the  small  dimensions  of  the  human  frame, 
much  greater  opportunity  is  afforded  for  ex- 
penditure of  wealth  to  gratify  our  tastes  and 
fancies. 

More  money  can  be  spent  on  an  estate  than 
on  a  suit  of  clothes,  hence  the  obvious  in- 
equalities in  homes  are  greater  than  the 
inequalities  in  what  we  wear. 

But  again  these  inequalities  are  most  con- 
spicuous in  community  owned  grounds  and 
buildings,  and  they  would  become  accentuated 
in  a  pure  communism.  It  is  a  part  —  and  a 
most  essential  part  —  of  the  dream  of  the 
thorough-going  communist  that  as  the  in- 
dividual is  deprived  of  the  opportunity  to 
spend  for  luxuries  beyond  the  reach  of  all,  the 


si 


222  Property 

state  will  more  than  supply  things  artistic  and 
beautiful,  it  will  so  far  outdo  the  millionaire 
that  the  masses  will  be  dazzled  by  the  glory. 
If  conmiunism  does  not  hold  out  that  promise, 
it  holds  out  nothing.  / 

No  theory  of  social  betterment  contemplates 
the  abolition  of  luxurious  homes  and  estates, 
but  in  some  way  the  state  is  to  "  o\vn  ' '  and 
control  them.  But  if  the  state  builds  all 
houses,  all  buildings,  one  thing  is  certain,  the 
world  will  lose  those  infinite  variations  in  style 
and  structure  due  to  individual  preferences 
and  taste  —  or  lack  of  taste. 

So  long  as  it  is  conceded  that  portions  of 
the  wealth  of  the  community  must  be  with- 
drawn, from  materially  productive  use  and 
devoted  to  houses,  factories,  hotels,  office 
buildings,  etc.,  etc.,  may  it  not  be  better  for 
the  community  not  only  to  permit,  but  encour- 
age the  individual  to  make  the  experiments  ? 

The  rich  man  who  builds  a  home  on  Fifth 
Avenue  and  furnishes  it  at  the  cost  of  a  mil- 
lion dollars,  or  who  develops  a  vast  estate  in 
the  country  like  a  great  park,  at  the  cost  of 
several  millions  cannot  take  either  with  him 


Luxuries  223 

when  he  dies.  If  a  Mr.  Carnegie  or  a  Mr. 
Frick  has  simply  dra^\^l  from  the  U.  S.  Steel 
Corporation  funds  enongh  to  do  these  things 
—  in  a  sense  he  has  directed  the  corporation  to 
do  it  —  in  a  still  profounder  sense,  by  reason 
of  his  paper  title  to  wealth  he  has  compelled 
the  community  to  do  it. 

The  prime  object,  let  ns  assume,  is  selfish, 
the  house  is  built,  the  estate  developed  for  per- 
sonal gratification,  and  it  all  seems  like  a 
luxury  —  one  part  home,  nine  parts  luxury. 

But  there  can  be  no  personal  gratification 
without  the  cooperation  of  the  public.  There 
must  be  a  public  to  see,  praise,  and  enjoy,  else 
the  house  would  not  have  been  built.  Even  if 
the  prime  motive  is  to  outdo  the  house  next 
door,  the  idea  is  to  outdo  it  in  the  estimation 
of  the  public. 

Imagine  how  we  would  dress,  and  the  places 
we  would  live  in,  if  we  knew  no  living  soul 
would  ever  see  us. 

The  broad  question  for  the  communist  and 
social  reformer  to  consider  dispassionately  is 
whether  the  community  would  in  the  long  run 
give  the  public  as  great  variety  and  perfection 


224)  Propc7'ty 

in    homes,    buildings,    estates,    as    is    enjoyed 
under  so-called  private  ownership. 

No  one  can  answer  that  question  definitely 
or  authoritatively,  and  the  debate  resolves 
itself  into  a  matter  of  personal  feelings  and 
preferences.  My  owtl  conviction  is  that,  not- 
withstanding all  the  waste  undeniably  inci- 
dental to  the  present  system,  it  is  better  than 
community  control  and  initiative  would  be.  It 
is  my  conviction  that  community  enterprise 
would  be  attended  with  more  waste,  extrava- 
gance, and  failures,  than  individual. 
»>    ♦    ♦ 

The  rich  man  fills  his  home  with  beautiful 
things  —  or  things  he  thinks  beautiful  —  appar- 
ently to  enjoy  them  himself,  but  not  so.  Every 
rug,  every  piece  of  furniture,  every  picture,  is 
bought  to  he  seen  by  others,  and  this  motive 
is  often  so  conspicuous  a  man  is  accused  of  be- 
ing ostentatious. 

The  net  result  of  the  building  of  the  home 
is  first  of  all  the  encouragement  of  architec- 
ture and  builders;  then  the  encouragement  of 
decorators,  craftsmen,  and  artists ;  thirdly  the 
stimulation  of  guests  and  visitors. 


Luxuries  225 

The  particular  house  may  have  failed  in 
every  respect  save  that  of  pleasing  an  owner 
who  was  without  taste  or  discrimination;  it 
may  be  an  *'  eyesore  "  on  the  street,  but  it  must 
ever  be  borne  in  mind  that  without  these  ex- 
periments public  taste  and  appreciation  would 
never  advance.  Under  an  absolute  com- 
munism the  experiments  would  have  to  be 
made  unless  the  conununity  was  prepared  to 
sink  to  a  most  deadly  monotony  in  clothes, 
homes,  buildings,  life. 

In  Athens  and  Rome  the  public  buildings 
were  conspicuously  successful,  but  so  were  the 
private  buildings  in  a  more  modest  way. 

In  other  countries  where  despotic  rulers 
could  impose  their  taste  on  the  public  the 
temples  and  buildings  were  great  monuments. 

But  generally  speaking  the  attractiveness  of 
a  city  or  a  country  depends  upon  the  oppor- 
tunity for  private  initiative  and  originality. 

The  cities  of  the  world  have  been  built  in 
the  main  by  the  individual,  now  and  then,  here 
and  there,  ornamented,  crowned,  by  the  expen- 
ditures of  the  community,  or  some  large  sec- 
tion of  the  community  such  as  a  religious  body. 


226  Property 

The  cities  of  America  are  as  they  are,  beau- 
tiful or  otherwise  in  effect,  as  the  result  of 
individual  initiative  and  effort. 

Unless  the  people  as  a  whole  are  prepared 
to  take  from  individuals  all  control  over 
clothing,  building,  furnishings,  then  the  present 
system  must  continue. 

Imagine  the  appearance  of  the  streets  in  any 
town  or  city  if  the  community,  as  a  commu- 
nity proposition,  laid  out  the  streets  and  built 
all  the  buildings ! 

The  community  could  not  justify  the 
elaborating  of  one  street,  or  block,  or  tene- 
ment, as  compared  with  others.  Why  should 
a  home  on  Fifth  Avenue  be  any  larger  or  better 
than  a  home  on  Second? 

AVhy  should  one  house  have  any  more  bath- 
rooms or  conveniences  than  another  housing 
the  same  number? 

Why  should  brick,  stone,  or  marble  ever  be 
used  if  the  cheapest  and  average  material  is 
cement  ? 

Why  should  any  family  be  permitted  a  rug 
or  a  carpet  unless  all  can  have  the  same? 

"W^y  should  any  man  be  given  a  picture  or 


Luxuries  22T 

a  piece  of  sculpture  or  a  piano  or  a  lot  of 
books  unless  all  can  have  the  same,  or  the 
equivalent  —  and  what  official  board  could  de- 
termine the  equivalence  between  a  painting  and 
a  piano  1 

And  if  in  some  way  a  city  with  fairly  good 
buildings  did  spring  up  as  the  capital  of  the 
community,  or  about  a  seaport,  what  right 
would  the  community  have  to  say  to  the 
farmer,  the  coal  miner,  and  others  outside  the 
city,  they  must  forever  remain  outside  and  be 
deprived  all  their  lives  of  the  pleasures,  com- 
forts, and  advantages  of  the  city? 

And  the  instant  any  superior  right  to 
pleasanter  surroundings  is  recognized  in  one 
man  or  class,  that  moment  distinctions  are  cre- 
ated that  are  precisely  akin  to  those  occasioned 
by  the  recognition  of  property  rights. 

The  moment  the  community  gives  the  dwel- 
ler in  the  city  a  right  to  keep  his  dwelling  for 
a  day,  a  year,  or  for  lifetime  —  the  length  of 
time  matters  not  —  as  against  all  other  men 
either  in  or  out  of  the  city,  at  that  moment  a 
private  right  is  created  which  is,  in  effect,  a 
property  right. 


228  Property ^^ 

It  is  impossible  to  conceive  a  community, 
however  Utopian,  that  would  not  necessarily 
assert  and  protect  the  rights  of  individuals  to 
the  food  they  must  eat,  the  clothes  they  are 
required  to  wear,  and  the  houses  they  occupy 
even  though  temporarily.  And  all  such  rights 
would  be  essentially  property  rights. 

The  community  might  **  owti  "  every  build- 
ing, but  when  it  authorizes  certain  individuals 
or  families  to  occupy  certain  buildings  to  the 
exclusion  of  others,  for  the  time  being  those 
individuals  or  families  in  reality  own  that 
building,  as  absolutely  as  under  existing  pri- 
vate ownership,  and  the  police  and  tribunals  of 
the  community  would  take  the  same  steps  to 
protect  the  control  and  possession. 

So  that  the  abolition  of  real  private  owner- 
ship as  distinguished  from  nominal  is  incon- 
ceivable in  any  communitj^  And  the  practical 
questions  are  the  extent  and  character  of  the 
ownership  that  will  best  promote  community 
welfare. 

♦    *    ♦ 

One  man  may  be  *'  rich  "  in  luxuries,  an- 
other **poor"  but  the  distinction  is  less  one 


Luxuries  229 

of  ownership  tlian  of  actual  control. 

It  is  a  matter  of  indifference,  not  wholly, 
but  practically,  to  the  public,  whether  a  picture 
gallery  is  ' '  owned ' '  by  the  city  or  by  a  cor- 
poration organized  to  maintain  the  gallery  (the 
situation  in  most  American  cities  with  art  col- 
lections) or  by  an  individual  so  long  as  the 
public  has  the  same  freedom  to  visit.  In  no 
case  would  the  public  have  entire  freedom  to 
do  as  it  pleased.  / 

But  it  is  rare  the  public  can  visit  a  private 
collection  as  often  as  it  can  a  public,  or  quasi- 
public,  hence  the  prejudice  —  such  as  it  may  be 
—  against  private  0A\Tiership  of  luxuries. 


The  question,  however,  is  again  one  of  ex- 
pediency, of  incentive. 

Does  the  community,  the  world,  gain  more 
in  the  long  run  by  not  only  permitting,  but 
encouraging  this  "private  ownership"  even 
to  the  point  of  permitting  by  law  the  selfish 
exclusion  of  the  public? 

The  instinct  of  ownership,  of  exclusive  con- 
trol is  so  strong  that  man  will  make  great  sac- 


S30  Property 

rifices  to  gather  and  control  works  and 
products  of  all  kinds.  Human  effort  in  any 
line  is  powerfully  stimulated  by  this  demand 
from  competing  individuals. 

The  undeniable  fact  that  unintelligent  de- 
mand leads  to  the  production  of  many  ugly 
things  and  to  useless,  idle,  vicious  efforts,  may 
call  for  close  scrutiny  and  revision  of  laws 
which  may  permit  too  great  latitude,  but  does 
not  necessarily  condemn  the  entire  system  of 
private  ownership  of  luxuries  and  luxury 
effects. 

♦    ««»    * 

The  late  Henry  C.  Frick  is  a  case  in  point. 

He  planned  and  built  his  home  on  Fifth 
Avenue  to  leave  to  the  public  as  a  museum. 

Measured  by  the  cost  in  dollars  and  cents 
the  house  and  all  its  contents  were  luxuries  to 
him  while  he  lived  and  owned  them. 

Under  his  will  they  pass  eventually  to  the 
public.  Do  they  cease  to  be  luxuries  the  in- 
stant they  pass  to  the  public? 

Reduce  the  question  to  a  concrete  example. 
He  paid  five  liundred  thousand  dollars  for  a 


Luxuries  231 

painting  by  Eembrandt  —  a  luxury  by  every 
known  definition  of  the  term. 

The  painting  passes  to  the  public.  Does  it 
cease  to  be  a  luxury,  and  if  so  how  and  why? 

The  time  and  labor  devoted  by  Eembrandt 
to  the  painting  of  the  picture  were  and  ever 
remain  a  fixed  quantity.  Was  the  painting  a 
luxury  to  the  community  Eembrandt  worked 
in? 

Every  communistic,  socialistic,  and  Utopian 
dream  tries  to  provide  for  the  production  of 
works  of  art  as  essential  to  the  happiness  and 
advancement  of  mankind,  more  essential  in 
a  sense  than  wheat  or  corn. 

Without  the  development  of  literature, 
music,  painting,  sculpture,  architecture — the 
adornments  and  graces  of  life,  life  would  re- 
main in  primitive  barbarism. 

Hence  it  is  conceded  there  are  more  and 
greater  necessities  than  bare  food,  clothing, 
and  shelter — those  are  the  least  of  man's 
necessities. 

♦»♦    ♦•♦    ♦♦♦ 

It  may  seem  like  the  wildest  extravagance 
to  pay  five  hundred  thousand  dollars  for  a 


232  Property 

painting/  but  so  far  as  the  world  is  concerned 
it  is  merely  the  shifting  of  that  much  wealth 
from  one  country  or  place  to  another  in  return 
for  the  painting. 

Both  Frick  and  Carnegie  lived  on  Fifth 
Avenue.  If  Mr.  Frick  had  bought  the  paint- 
ing of  Mr.  Carnegie,  the  sum  total  of  the  wealth 
of  the  country  would  not  have  been  altered  one 
iota.  The  effect  would  have  been  the  same  as 
if  Mr.  Frick  had  made  Mr.  Carnegie  a  present 
of  five  hundred  thousand  dollars  in  money  or 
in  the  stock  or  bonds  of  the  Steel  Corporation. 
The  transfer  of  the  painting  from  the  Carnegie 
home  to  Mr.  Frick 's  would  have  amounted  to 
no  more  than  the  passing  of  a  paper  receipt 
for  the  money. 

If  the  painting  is  bought  in  England  the 
effect  is  materially  different.  Five  hundred 
thousand  dollars  of  American  products  must 


^In  the  opinion  of  the  writer  it  is,  because  it  is  simply 
the  bidding  of  rich  men  for  an  object  that  cannot  be 
duplicated,  and  the  price  has  no  relation  to  the  aesthetic 
value  of  the  object  but  it  is  determined  wholly  by  the  size 
of  private  fortunes  at  the  time.  As  good  and  better 
pictures  can  be  bought  for  a  thousand  dollars  if  buyers 
will  seek  out  the  living  Rembrandts  who  are  struggling  as 
he  did  for  recognition. 


Luxuries  233 

ultimately  go  to  England  in  return  for  the 
painting.  The  sum  total  of  the  world's  wealth 
is  not  increased  or  diminished ;  that  could  only 
be  done  if  we  had  commercial  relations  with 
Mars  and  could  send  a  half  million  dollars 
worth  of  products  to  Mars  in  exchange  for  a 
painting. 

♦    ♦    ♦ 

It  may  be  argued  v/ith  a  strong  show  of  rea- 
son that  for  Americans  —  which  really  means 
America — to  pay  high  prices  in  American  ex- 
ports to  other  countries  for  works  of  art  in 
those  countries,  is  indulging  in  useless  extrava- 
gance, in  luxuries,  that  cannot  be  justified. 

Why  send  to  England  five  hundred  thousand 
bushels  of  American  wheat  to  pay  for  a  paint- 
ing that  is  just  as  well  off  in  England?  Why 
take  it  from  the  people  of  England? 

A  reasonable  distribution  of  the  beautiful 
things  of  the  world  is  a  good  thing  for  mankind. 
It  is  a  good  thing  for  the  Western  World  to 
have  examples  of  the  art  of  the  East,  just  as 
it  is  important  for  the  Western  World  to  know 
something  of  the  literature  of  the  East. 

Hence  it  follows  it  is  a  good  thing  for  every 


234  Property 

country  to  exchange  some  of  its  material 
products  for  some  of  the  art  works  of  other 
countries.  America  can  well  afford  to  export 
some  of  its  wheat,  corn,  iron,  steel,  for  beau- 
tiful things  produced  in  Europe  and  Asia;  it 
is  the  quickest  way  for  us  to  progress  intel- 
lectually and  aesthetically — to  catch  up  —  so 
to  speak  —  with  older  peoples,  to  accomplish  in 
a  generation  what  would  otherwise  take 
centuries  to  achieve — to  go  on  from  where 
they  left  off. 

♦    ♦    ♦ 

If  it  be  conceded  that  it  is  a  good  thing  for 
this  country  to  export  some  of  its  material 
wealth  for  works  of  art,  it  matters  little,  in 
one  sense,  whether  that  exchange  is  made  by 
individuals  or  by  states. 

The  advantages  on  the  side  of  the  individual 
are  his  initiative  and  willingness  to  back  his 
judgment  and  take  risks — the  personal  equa- 
tion. The  state  —  like  governing  bodies  of  art 
museums  —  is  a  slow,  conservative  buyer,  buy- 
ing only  when  artists  have  "  arrived." 

The  individual  takes  chances,  supports  the 
unknown,   the    radical,   the   struggling   artist, 


Luxuries  236 

often  when  art  critics  and  the  entire  academic 
and  official  world  laugh  and  ridicule. 

The  disadvantage  with  individual  buying  lies 
in  his  reckless  bidding  up  of  prices  and  his  in- 
satiable desire  to  "  owoi "  for  the  time  being 
a  work  of  art  that  other  men  of  wealth  and 
national  collections  covet.  Against  such  com- 
petition the  rich  individual  bids  a  half  million 
or  more  for  a  painting  that  may  have  been 
sold  by  the  artist  for  the  equivalent  of  twenty- 
five  dollars. 

♦    ♦    ♦ 

If  deemed  desirable  this  reckless  bidding  for 
works  of  art  could  be  checked  and  controlled 
eitker  by  direct  prohibition  or  by  prohibitive 
taxes. 


♦I*       ♦!♦       ♦!♦ 


But  if  all  luxuries  were  kept  do^vn  in  price 
to  a  level  where  they  ceased  to  shock  and  amaze 
as  extravagances,  the  problem  of  "luxuries," 
as  such,  would  not  be  solved,  for  nearly  all 
so-called  luxuries  are  incentives. 
♦j»    ♦    ♦ 

The  pernicious  side  of  extravagance  is  not 
its  cost  in  time,  labor,  money,  or  resources,  but 


236  Property 

its  example.  It  accentuates  and  magnifies  the 
gulf  that  divides  the  masses  who  cannot  afford 
those  things  from  the  individual  who  can. 

Furthermore,  as  our  argument  has  demon- 
strated, when  an  individual  spends  ten  thou- 
sand dollars  on  an  evening's  entertainment,  he 
is  nominally  spending  "his  own  money;"  in 
reality  he  is  taking  that  much  from  productive 
enterprises  and  spending  it  in  a  few  hours  on 
entertainment  that  may  be  worse  than  unpro- 
ductive-—vicious;  or  it  may  he  so  beautifully 
and  finely  done  that  the  community  may  derive 
a  pleasure  and  profit. 

The  number  of  wholly  vicious  extravagances 
are  comparatively  few  —  so  few  they  are 
startlingly  conspicuous  even  in  our  largest 
cities.  Outside  of  our  largest  cities  there  is 
almost  none. 

♦    ♦    ♦ 

Let  us  approach  Luxuries  at  another  angle. 

So  far  we  have  considered  them  almost  en- 
tirely from  the  standpoint  of  the  individual 
possessing  or  enjojdng  them.  Let  us  view 
them  from  the  standpoint  of  the  community — 
the  state,  the  nation,  the  entire  civilized  world, 


Luxuries  237 

it  matters  not,  the  same  considerations  apply. 
But  for  the  sake  of  clarity  keep  in  mind  some 
one  nation  —  say  these  United  States  of  ours. 

*•*     ***     ^2* 

Men  cannot  live  without 

1.  Food 

2.  Clothing 

3.  Shelter 

To  these  three  prime  essentials  may  be 
added  very  appropriately, 

4.  Amusements 

Any  one  of  these  four  essentials  of  life  may 
be  either  a  necessity-  or  a  luxury,  and  it  is 
obvious  that  the  distinction  does  not  lie  in  the 
thing  itself. 

If  every  member  of  the  community  has,  or 
can  have  a  woolen  suit  or  a  sealskin  coat,  then 
woolen  suits  and  sealskin  coats  are  not 
luxuries.  But  if  only  a  few  of  those  who  want 
sealskin  coats  can  have  them  then  they  are 
luxuries  enjoyed  by  the  few  "who  have  the 
money  or  power  to  secure  them. 
*>    ♦    * 

If  every  member  of  the  community  who 
wants  it  can  have  champagne,  then  champagne 


238         Property 

is  not  a  luxury.  But  if  only  a  few  have  the 
means,  power,  or  opportunity  to  secure  it  then 
it  is  a  luxury. 

If  all  members  of  the  community  have  pre- 
cisely equal  opportunity  to  enjoy  a  particular 
fine  musician,  theater,  actor,  singer,  then  that 
form  of  amusement  is  not  a  luxury  to  any  soul 
in  the  community;  it  is  a  pleasure  equally  ac- 
cessible to  all,  no  one  pays  or  gives  anything 
for  any  special  privilege. 

If  all  members  of  the  community  have  equal 
opportunity  to  enjoy  a  particular  park, 
museum,  or  public  building  of  any  kind,  then 
such  place  is  not  a  luxury,  it  is  part  of  the 
daily  life  and  pleasure  of  all.  But  if  only  a 
few  can  enjoy  it  freely  and  others  are  obliged 
to  pay,  or  sacrifice  time  and  money  in  travel 
to  enjoy  it,  then  as  to  them  it  is  a  luxury  main- 
tained for  the  benefit  of  the  few  in  tke  vicinity. 
♦    ♦    ♦ 

In  short  the  definition  of  ' '  Iuxubj  ' '  turns 
less  upon  the  nature  of  the  thing  itself  than 
upon  the  opportunities  of  all  to  use  or  enjoy  it. 

A  man  or  a  class  may  be  so  accustomed  to 
certain   foods,   clothing,   shelter,   amusements, 


Luxuries  239 

that  they  consider  them  necessary  to  their 
existence,  but  to  the  masses  who  cannot  afford 
them  they  are  in  the  truest  sense  of  the  term, 
luxuries  —  luxuries  to  be  enjoyed  either  rarely 
or  never  at  all. 

Pursuing  this  line  of  reasoning  to  its  logical 
conclusion,  it  follows  that  if  a  community 
would  get  rid  of  luxuries  it  must  direct  its  pro- 
ductive and  distributive  efforts  in  such  a  way 
that  ALL 

Food 

Clothing 

Shelter 

Amusements  ; 

shall  be  equally  accessible  to  ALL. 

No  individual  must  have  any  form  of  food, 
clothing,  shelter,  amusement,  that  is  not 
equally  available  to  every  other  individual. 
The  nation,  the  state,  the  city  must  build  noth- 
ing, support  nothing  that  gives  any  particular 
locality  any  greater  attraction  or  desirability 
over  other  localities.  The  location  of  the 
capitol,  the  maintenance  of  a  university,  or  a 
trade  school,  the  support  of  a  museum  in  a  par- 
ticular city  is  a  direct  discrimination  against 


240  Property 

other  cities,  a  direct  conferring  of  advantages 
on  a  selected  spot,  in  short  the  giving  to  the 
people  of  the  vicinity  a  very  great  luxury. 

The  extension  of  a  railway  to  a  particular 
place  is  a  great  discrimination  in  favor  of  that 
place.  The  establishing  of  a  nation-owned 
industry  in  a  particular  locality  is  likewise  a 
discrimination  in  favor  of  that  locality.  The 
location  of  a  government  building,  a  post  office 
in  a  particular  block  in  a  city  is  a  discrimina- 
tion in  favor  of  those  in  the  immediate  vicin- 
ity, and  against  those  who  have  to  spend  time 
and  money  to  use  the  building. 
*s*    ^    ^ 

To  eliminate  —  theoretically  —  all  luxuries, 
we  are  forced  to  the  conclusion  that  a  tlieoreti- 
cally  pure  communism  which  demands  absolute 
equality  of  enjoyment  and  opportunity,  would 
be  obliged  to  forbid  the  production  of  any  kind 
of  food,  clothing,  shelter,  amusements,  that  can- 
not be  enjoyed  by  all  on  a  footing  of  equality. 

If  even  the  slightest  departure  from  this  rule 
is  conceded  luxuries  appear  and  inequality  re- 
sults. 

Consider    for    a   moment   what    this    rigid 


Luxuries  S41 

elimination  of  luxuries  would  do  in  —  let  us  say 
—  so  productive  a  country  as  ours. 

It  would  take  out  of  the  market  all  those 
food-products  the  production  of  which  is  in- 
sufficient to  supply  the  desires  of  all.  All 
clothing  materials,  forms  and  styles,  would  be 
reduced  to  such  as  all  could  have.  Forms  and 
styles  of  shelter  would  be  restricted  to  such 
as  all  could  enjoy  on  conditions  of  absolute 
equality.  Likewise  all  forms  of  recreation  and 
amusements.  Neither  an  orchestra  nor  a  base- 
ball nine  could  be  supported  out  of  community 
funds  because  only  a  few  would  be  able  to 
enjoy  either  —  even  though  the  attempt  were 
made  to  give  any  locality  of  any  size  its  own 
orchestra  and  its  own  nine.  The  very  attempt 
to  segregate  and  support  a  large  body  of 
musicians  and  ball  players  would  make  of  them 
a  privileged  class,  and  would  arouse  envy  and 
discontent.  Musicians  and  would-be  ball  play- 
ers barred  from  the  state  organizations  would 
complain  bitterly. 

♦    ♦    ♦ 

But,  assuming  for  the  moment,  a  productive 
country  like  the  United  States,  manages  to  get 


S42  Property 

its  production  and  distribution  on  a  tJieoreti- 
•  cally  pure  communistic  basis,  so  that  no  forms 
of  food,  clothing,  shelter,  amusements,  are  pro- 
duced that  are  not  equally  open  to  all,  the  re- 
sults would  be  a  certain  even  standard  of  en- 
joyment in  all  four  essentials.  This  ideal  — 
theoretical — includes,  possibly,  white  or  wheat 
bread  for  all — though  by  no  means  in  un- 
limited quantities. 

Now,  how  about  the  countries  of  the  world 
where  white  bread  is  a  luxury? 

How  about  Mexico,  for  instance,  and  the 
peoples  of  Central  and  South  America? 

If  they  are  included  in  one  theoretically  pure 
communistic  scheme  of  production  and  distri- 
bution, the  standard  of  living  in  this  country 
would  be  lowered  materially.  If  the  peoples  of 
Japan  and  China  are  included  the  standard 
would  take  a  drop  below  that  of  the  poorest 
families  in  this  country. 

<»    ♦    <> 

The  glamour  of  the  ideal  communism  disap- 
pears when  the  communistic  distribution  of 
goods  is  made  to  include  foreign  and  poorer 
peoples.    In  fact  on  this  test  the  communistic 


Luxuries  245 

fabric,  so  fascinating  when  its  vague  and  glit- 
tering fancies  are  confined  to  us,  collapses.  It 
cannot  stand  the  test  of  thorough-going  logical 
application;  at  heart  it  is  as  supremely  selfish 
as  any  individualistic  scheme. 

«      «>      4» 

The  net  result  of  the  foregoing  is  the  con- 
clusion that  luxuries  are  inevitable  in  human 
progress.  This  is  conceded  by  every  utopian 
dreamer.  In  fact  utopian  writers  and  dream- 
ers dwell  almost  entirely  upon  the  pleasures  of 
their  Utopias,  upon  the  leisurely  lives  of  their 
people,  and  upon  the  beautiful  things  all  will 
enjoy.  Instead  of  levelling  palaces  in  some 
way  they  are  to  be  made  more  numerous  and 
more  wonderful  by  the  community  itself. 

But  no  Utopian  theorist  or  communistic 
writer  gets  down  to  hard  facts,  to  details  and 
demonstrates  how  all  this  can  be  done  without 
favoring  some  as  against  others;  they  slur 
this  part  of  their  argument 
«s»    ♦    ♦ 

If  luxuries  are  not  only  incidental  but  essen- 
tial to  human  progress,  then  it  is  a  fairly  debat- 
able question  whether  the  present  individual — 


244  Property 

competitive  one  might  say  —  scheme  of  pro- 
duction and  distribution  does  not  achieve  bet- 
ter results  than  any  communistic  plan,  and 
until  the  communistic  plan  gets  down  to  detail 
and  shows  how  luxuries  can  be  produced  and 
distributed  fairly  and  satisfactorily  by  the 
community,  the  world  must  be  content  with  the 
present  competitive  organization,  hut  with  such 
modifications  and  improvements  as  will  dull 
the  sharp  corners  and  smooth  the  rough  places. 


XI 

A  LOGICAL  CONSEQUENCE 

Who  Pays  Taxes? 

Not  only  the  average  man,  but  speakers  and 
writers  upon  taxation,  assume  that  the  burden 
of  taxation  rests  on  the  shoulders  of  the  man 
who  pays  the  taxes. 

The  assumption  is  false  and  mischievous  be- 
yond calculation.  It  is  at  the  basis  of  more 
radical  and  vicious  social  and  economic  experi- 
ments and  propaganda  than  almost  any  other 
erroneous  economic  theory. 
♦    ♦    « 

Taxes  are  paid, 

A.  By  check 

B.  By  paper  currency 

C.  By  coin 

D.  In  produce  or  goods  —  very  rarely 
in  highly  civilized  communities. 

But  while  in  advanced  communities  taxes  are 
seldom  paid  directly  in  goods  or  produce,  it  is 
plain  on  final  analysis,  that  all  taxes  are  paid 
in  services,  produce,  and  goods. 

245 


246  Property 

The  use  of  money,  or  a  check,  is  a  mere  con- 
venience—  a  token  handed  the  government  to 
enable  the  government  to  go  out  and  get  the 

services  and  products  it  needs. 

♦  ♦    ♦ 

Whether  the  government  issues  a  billion  dol- 
lars in  bonds  (or  any  other  form  of  paper 
promises  to  pay),  or  a  billion  dollars  in  paper 
tax  receipts  (still  paper,  but  not  promises  to 
repay)  the  result  as  regards  consumption  of 
services  and  goods  is  precisely  the  same. 

Both  bonds  and  tax  receipts  are  issued  to 
buy  services  and  goods  needed  noiv. 

So  far  as  the  industrial  economy  of  the 
country  is  concerned  for  both  classes  of  paper 
it  is  called  upon  to  furnish  within  the  fiscal 
year  services  and  products  to  the  value  of,  say 

one  billion  dollars. 

♦  ♦    ♦ 

It  is  a  popular  notion  —  fallacious  —  that  the 
issuing  of  bonds  instead  of  a  tax  levy,  some- 
how shifts  both  the  financial  and  industrial 
burden  to  future  generations. 

The  economic  burden  cannot  he  shifted. 

If  the  government  needs  a  million  bushels  of 


A  Logical  Consequence  247 

wheat  or  a  million  yards  of  cloth  the  supply 
must  he  drawn  from  the  wheat  and  cloth  of 
today;  there  is  no  magic  whereby  it  can  be 
drawn  from  that  of  a  year  hence. 

If  the  government  needs  a  million  men  for 
its  armies  they  must  be  drawn  from  the  men 
of  today,  and  be  equipped,  supported,  and  paid 
by  the  services  and  products  of  today. 

During  the  World  War  the  several  nations 
issued  thousands  of  tons  of  paper  —  paper 
money,  paper  bonds,  paper  promises  to  pay 
in  many  forms.  These  paper  promises  and  re- 
ceipts amounted  to  not  simply  billions,  but 
hundreds  of  billions  of  dollars. 

But  did  all  this  paper  shift  the  burden  of  the 
war  from  the  men  and  women  of  today  to 
future  generations  ? 

Not  a  single  penny's  worth.* 


^  Except  in  so  far  as  one  country  gave  its  bonds  or 
other  promises  to  pay  to  another  country  in  return  for 
goods.  To  that  extent  one  country  may  receive  now  the 
goods  it  needs  today  in  return  for  the  paper  promise  to 
return  those  goods  or  their  equivalent  —  twenty  or  thirty 
years  hence.  For  the  purpose  of  our  argument  interna- 
tional borrowing  may  be  ignored.  In  immediate  economic 
effect  it  simply  induces  the  other  nation  —  neutral  or  allied 
—  to  carry  a  share  of  the  daily  war  burden,  and  for  the 
time  being  the  neutral  nation  is  in  reality  an  ally  to  the 


248  Property 

It  was  the  boast  of  our  government  that 
nearly  one-third  of  every  dollar  spent  on  the 
war  was  raised  by  taxes,  and  only  about  two- 
thirds  by  borrowing. 

That  fooled  not  only  the  people  but  financiers 
and  writers. 

As  a  matter  of  fact  every  cent  of  every 
dollar  needed  came  from  the  people  each  year. 

The  government  required  in  services  and 
goods,  let  us  say,  twenty-four  billions  of  dol- 
lars the  last  year  of  the  war. 

To  get  the  twenty-four  billions  it  issued 
eight  billions  paper  tax  receipts  and  sixteen 
billions  paper  bonds. 

In  a  profound  sense  the  printing  of  these 
cleverly  worded  pieces  of  paper  and  giving 

/them  to  the  people  in  return  for  services  and 
goods,  is  a  mere  juggling  with  hard  facts,  so 
that  the  truth  may  be  concealed. 
Every  cent's  worth  of  the  twenty-four  bil- 


extent  it  furnishes  services  and  goods  in  return  for  paper 
promises  to  pay  —  promises  that  may  not  be  kept,  depend- 
ing upon  the  outcome  of  the  war.  Industrially  and  eco- 
nomically the  people  of  the  United  States  were  the  allies 
of  the  Allies  from  the  outset  of  hostilities  in  1914,  as  they 
would  have  been  economic  supporters  of  Germany  if  the 
channels  of  trade  had  been  open. 


A  Logical  Consequence  249 

lions  of  services  (men  in  service  and  all  em- 
ployees), and  goods,  is  supplied  by  the  men, 
women,  and  children  of  today,  and  supplied 
from  day  to  day  as  needed. 

If  a  government  had  the  wisdom  and  the 
strength  not  a  single  bond  or  other  promise  to 
pay  need  be  issued  to  carry  on  any  war  —  only 
paper  tax  receipts. 

But  financing  a  war,  or  any  other  large  gov- 
ernment need,  is  a  fine  art,  a  species  of  legerde- 
main, whereby  billions  of  paper  values  are  cre- 
ated to  be  juggled  with  for  years  and  perhaps 
generations  to  come. 

Psychologically  this  legerdemain  may  be 
necessary.  Without  it  the  people  might  real- 
ize just  where  the  burdens  of  vast  expenditures 
fall,  and  they  might  rebel. 

The  average  man  is  quick  to  vote  for  a  bond 
issue  when  he  w^ould  violently  protest  if  it 
should  be  proposed  to  increase  taxes  to  secure 
the  money. 

Yet  in  the  end  the  money  and  all  the  cost  of 
borrowing  must  be  covered  hy  taxes. 

♦      ♦      ♦!♦ 

It   matters    not    how    the    problem    is    ap- 


250  Property 

proaclied  the  fact  remains  that  every  dollar 
collected  by  the  government,  whether  by  issu- 
ing paper  tax  receipts,  or  paper  promises  to  re- 
pay, comes  from  the  community  in  the  form 
of  services  and  goods. 

This  being  so  it  follows  that  the  man  who 
(a)  pays  the  taxes,  or  (b)  loans  the  money, 
is  only  a  means  to  an  end.  He  does  not  in 
reality  render  the  government  either  services 
or  goods  except  his  small  share  as  an  individual 
like  other  individuals  similarly  situated. 

To  illustrate,  a  doctor  in  practice,  happens 
to  be  a  ''rich"  man.  He  has  a  million  dol- 
lars in  bonds  which  yield  him  an  income  of 
thirty  thousand  a  year.  As  he  earns  from  his 
practice  more  than  he  spends,  he  invests  each 
year  his  entire  thirty  thousand  in  other  bonds — 
i.  e.,  loans  it  and  receives  more  pieces  of  paper. 

The  government  in  a  war  or  other  emer- 
gency sees  fit  to  levy  a  tax  taking  all  unearned 
incomes. 

The  doctor  no  longer  receives  his  thirty 
thousand  a  year  in  interest  coupons ;  or  rather 
he  cuts  tliem  from  his  bonds  and  immediately 
turns  them  over  to  the  government;  in  effect 


A  Logical  Consequence  251 

the  goveriiment  lias  appropriated  the  interest 
on  the  bonds.  If  the  doctor  held  any  railroad 
bonds  the  railroad  would  go  on  paying  the 
interest  just  the  same  but  to  the  government 
instead  of  to  the  doctor;  the  railroad  would 
not  know  the  difference. 

Has  the  government  in  reality  taxed  the 
doctor?  Has  it  called  upon  him  for  either 
goods  or  services? 

Not  at  all.  His  daily  work  is  not  affected 
in  the  slightest  degree  —  save  as  discontent 
may  affect  it.  His  professional  income  re- 
mains the  same. 

Not  until  one  of  two  things  happens  is  he 
really  taxed — i.  e.,  called  upon  to  contribute 
goods  or  services. 

If  the  government  calls  upon  him  for  (a) 
actual  services,  as  it  did  during  the  war,  or 
(b)  takes  from  him  a  part  of  his  professional 
earnings,  as  it  now  does  under  the  income  tax, 
then  he  is  in  reality  contributing  services  and 
goods,  and  either  contribution  may  seriously 
affect  his  productive  power,  in  short  his  eco- 
nomic value  as  a  productive  factor  in  the  com- 
munity. 


252  Property 

A  farmer  may  be  substituted  for  a  doctor 
and  the  argument  made  still  more  vivid. 

♦    ♦    ♦ 

f     Let  us  assume  the  government  decides  on  a 

capital  tax  levy.    To  illustrate  lei  us  assume 

it  confiscates  in  form  of  taxation,  all  **  private 

fortunes."    Who  pays  the  tax? 

Nominally  the  individual  who  has  a  thousand 
bonds  in  his  safety-deposit  box,  but  as  a  mat- 
ter of  fact  he  has  simply  handed  to  the  tax 
collector  a  thousand  pieces  of  paper,  and  the 
government  takes  those  pieces  of  paper  and 
goes  to  the  railroad  and  industrial  companies 
that  issued  them  and  demands  payment  of 
either  interest  or  principal. 

The  entire  economic  and  industrial  fabric 
of  the  community  is  disturbed  by  the  shifting 
of  paper  titles,  because  the  government  is  never 
thrifty,  it  always  wants  its  money,  and  always 
spends  it  wastefully.  Never,  like  the  hypo- 
thetical doctor,  does  it  carefully  invest  the  in- 
terest and  reinvest  the  principal. 
♦    ♦    ♦ 

To  the  socialist,  the  communist,  and  to  the 
radical  agitator  generally  the  proposition  to 


A  Logical  Consequence  253 

confiscate  private  fortunes  —  private  property 
—  sounds  good,  and  is  received  with  applause. 

Men  of  that  class  never  pause  to  think  far 
enough  to  see  that  the  ''private  fortune"  is 
largely  a  myth,  a  legal  fiction,  maintained  not 
for  the  benefit  of  the  individual,  but  as  a  de- 
vice for  the  advancement  of  the  community. 

If  this  ingenious  fiction  in  its  many  ramifica- 
tions is  unsound  then  plainly  it  would  be  bet- 
ter to  modify  or  abolish  it  directly  than  to  en- 
courage it  and  at  the  same  time  abolish  it  by 
confiscation  in  whole  or  in  part. 

On  the  other  hand  if  the  legal  fiction  of 
''private  property"  is  an  indispensable  factor 
in  social  progress  then  society  should  be  ex- 
ceedingly careful  about  attacking  it  indirectly 
by  taxes  which  confiscate  —  abolish  —  in  whole 
or  part. 

*    ♦    ♦ 

In  a  profound  sense  a  tax  on  unearned  in- 
come is  not  a  tax  on  the  individual  at  all,  but 
is  rather  a  deprivation — a  cancellation  of 
''property  rights,"  a  modification  of  the  the- 
ory of  private  property. 

A  tax  on  earned  income  is  a  tax  on  the  in- 


^54  Property 

dividual  —  a  real  demand  for  a  portion  of  his 
services  or  the  products  of  his  services. 

The  arguments  for  and  against  the  one  have 
no  logical  connection  with  the  arguments  for 
and  against  the  other. 


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